Bunker price volatility and lack of trust: the issues impacting your business - Inatech
- June 6, 2016
- Posted by: Tom Hedge
- Blogs
Bunker price volatility, credit risk and fuel quality are the real issues impacting ship operators and bunker suppliers according to recent research conducted by Inatech.
The research, which forms part of our on-going webinar programme, aims to ask attendees about the issues that matter to them.
In the first of two blogs, we highlight some of the factors that are keeping senior decision makers awake at night.
To read the full report, available in an easy-to-access website, simply click here and register your details.
Bunker price volatility is the biggest challenge facing 46% of respondents
When we asked respondents the question ‘what is the biggest challenge facing the bunkering industry’, two issues scored highly with respondents, bunker price volatility – 46% and credit risk – 40%.
Although bunker prices have fallen sharply over the last year, uncertainty over supply, OPEC disagreements and the USA’s shale oil production have seen prices change regularly. As the research shows this volatility is impacting ship operators and bunker suppliers alike. For operators this affects profitability. For bunker suppliers, who work within such small margins even a small change in fuel price could mean a loss making deal.
Interestingly credit risk is also a concern. Those more affected are bunker suppliers, who have to carry the burden of cost right through the supply chain. With margins tight the cost and availability of credit and the credit-worthiness of customers can have a significant impact on business. The collapse of OW Bunker highlights the risks, shows how vulnerable the industry can be and goes some way to explain why marine fuel suppliers rated getting credit as a challenge for their business.
Pricing also the biggest concern for operators when partnering with suppliers
When asked ‘what is the biggest issue with your partner in the bunkering industry?, price again featured highly with 43% of respondents. It was closely followed by trust at 39%.
These two issues highlight the need for transparency across the industry. This is always going to be a difficult issue to tackle.
From our additional 1:1 research with both ship operators and suppliers we found that trust and concern over fuel prices were lower where there was a long term buyer/supplier relationship. In these circumstances when disputes occurred they tended to be resolved quickly.
Using fuel procurement software also gives operators a way to reduce risk by using the option to go out to tender and get multiple quotes from different suppliers. Again offering the option to compare and select the best deal. These systems also offer the option to monitor supplier performance helping to further identify more reputable suppliers.
53% see trust in pricing information as the issue when bunkering a vessel
When we asked ‘what is the biggest operational challenging when bunkering a vessel?’ trust in pricing was chosen by over half the respondents.
This statistic again highlights how important transparency is when it comes to pricing. Solid and long term supplier/buyer relationships and having access to data around the quality and availability of good suppliers is key to building and maintaining trust.
Keen to know more or join the debate?
You can read the full survey results here. Or if you would like to share your views on our research findings then we welcome your input in the comments section below.