Bomin: Quality Will Keep Buyers Loyal

Jan Christensen, Managing Director, Bomin. Image Credit: Bomin

Much has been made of the power of new technology to disrupt established business practice but for German bunker company Bomin that threat is less of a worry since wafer thin margins affect all players.

In an interview with Ship & Bunker earlier this summer, Bomin Group's managing director Jan Christensen said he recognised the threat.

"The bunkering market has seen a number of start-ups in recent years claiming to be able to provide lower cost fuel," he said.

But how those start ups will overcome "the small margins that characterise the industry" is another matter.

"Low-price shoppers are loyal only to price, and it's very expensive to build and populate a platform."

Christensen said that the whole notion of an intermediary in bunkering has been under review since the infamous collapse of Danish outfit OW Bunker.

That bankruptcy claimed its spot in the pantheon of bunker company disasters for two reasons. The fact that it had recently listed on the Copenhagen stock exchange was shocking enough but its trading model, when put under intense pressure, seemed to crumble away, listing or no listing.

"In the half-decade since then, the removal of intermediaries has been an ever-present theme," the Bomin MD said. The corollary being that as in a storm, buyers will head for a safe port.

"Fuel buyers have consistently voted with their feet for well-capitalised physical suppliers that can deliver value beyond the price per tonne."

Being adequately capitalised to meet customers' demands ahead of the great change in 2020 is a theme Chrisensen warms to.

"Investment in our physical operations to help our customers meet the new challenges that they face in relation to fuel supply is a top priority."

Prompted by its own market research, the company "chartered in state-of-the-art, 3,600 deadweight tonne (dwt) and 3,100 dwt vessels to expand our physical presence in ARA".

"Both of these vessels come with fast pumping rates to maximise speed throughout the delivery process, as well as Coriolis mass flow meters installed to guarantee customers receive the quantity of products that they order, and to drive further operational efficiencies," Christensen said.