Marine Fuel Solutions
Cockett Marine Oil Group | www.cockettgroup.com Tel: +971 44 255 100 | Fax: +971 44 255 111 | Email: [email protected]
Platts European Bunker Conference RotterdamMay 2015Chris Turner Group Technical Manager
The Quantity Conundrum Is it enough to be price competitive ?
Quantity Conundrum
2
Current Climate
Challenges to the industry
Is it enough to be price competitive ?
Plat
ts 2
015
Quantity : Navigating Stormy Seas
3
• Bunker Cost– Even with drop in Crude Bunker costs remain significant cost for a shipper
• Freight rates continue to be under pressure due to global slowdown – no sign of light at the end of the tunnel.
• Buyer challenged to make savings – but is it really a saving?
• Suppliers under pressure, Cash is King !• Importance of bunker purchasing knowledge• Action required
Plat
ts 2
015
Shipping industry remains in difficulties
4
Platts 2015 ECA seeing no benefit to reduction in Crude and
corresponding fall in Bunker Prices
Spectre of modal shift (in ECA’s) remains
Brent crude recovering somewhat in recent weeks
Dry Bulk sector remains in real difficulties
On 18 February 2015 the Baltic Dry Index* reached the historic low of 509
BDI (an assessment of the price of moving major raw materials by sea)
ARA LSFO v MGO
Challenges
5Plat
ts 2
015
Buyer
• Individual performance is often benchmarked to spot market• Continually challenged and measured on getting lowest price• Often role is not solely purchasing, Training• Bigger picture of aftermath often left with Operations, Technical, Vessel.
Supplier
• CIA or short credit v credit offered, financing costs, late payments• Highly competitive enquiries driven by pressures from buyer • Extra costs, Equipment, Bunkers, Surveyors, Testing, Compliance• It is not unknown that supplier be selective in offering basis history of vessel• Margins very small for such a high value commodity
Reality
• Volume measurement not exact science• Reality is issues do occur • Apparent distrust on both sides
Reality
6Plat
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015
Control measures needed to protect position on all sides
Appointment of surveyors, “Expense ?”
Clear instructions including requirements if/when a dispute occurs
Better to resolve volume dispute at time than investigate retrospectively
Date/Time stamped Photographic evidence especially for Cappuccino
Cost of a density determination well worth paying to check for simple shortlift discrepancies
Balanced view required : 221 B Surveys and their results tell another story
Added Value
7Plat
ts 2
015
Training of buyers into critical aspects of bunker purchase procedures
Day to day guidance with buyer in full knowledge
Supplier has been vetted, GTC’s negotiated
Port Knowledge / Limitations have been considered
Vessel histories via IMO No.
Recommendation / Appointment of BQS surveyors
Technical support : Assisting in investigation when (not if) a problem occurs
Trader Perspective
8
Platts 2015
At this time it is a sad fact that it is only enough to be price competitive
Forces will draw buyer to lowest
price
Rose tinted spectacles instead of
facing realities
Reactive rather than proactive
nature
But someone has to deal with the fall out!
Conclusion
9
Platts 2015
Quantity discrepancies
remain a minefield the industry is yet
to escape from
Vicious circle will remain as long as price
is key
Added value should make a difference but
sad fact is “price rules”
Regulation (Singapore etc) on the
horizon may signal change
Care needed to protect
interests and a reality check
needed
Worldwide Bunker Supplies | Trading • Physical • Offshore
Cockett Marine Oil Group | www.cockettgroup.com Tel: +971 44 255 100 | Fax: +971 44 255 111 | Email: [email protected]
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