Business

SIBCON 2020: Deep dive finds out how bunkering value chain is coping with industry issues post Covid-19

Representatives of Oldendorff Carriers, Hafnia, TMFGS, and Sing Fuels provide their perspectives on scrubbers, bunker demand, market dynamics and more.

Published

4 years ago

October 9, 2020

Admin

Several stakeholders in the bunkering value chain provided information on how their respective businesses were coping this year during a deep dive session at the 21st edition of Singapore International Bunkering Conference, also known as SIBCON 2020, on Tuesday (6 October).

Unni Einemo, Director & IMO Representative of the International Bunker Industry Association (IBIA), who was moderating the session SIBCON Deep Dive: Managing the Strategic and Operational Impact to Industry Post COVID-19 asked panellists how they expect demand for bunkers to be in the next six to 12 months.

She also asked the panel about how oil market dynamics caused by Covid-19 had influenced the choice of IMO 2020 compliant fuels in terms of price, availability and quality, including the use of scrubbers with HSFO, Covid-19 operational impacts, counterparty credit risk, and more.

Oldendorff Carriers

“We have always been working on it and we knew the challenge when we knew we would be going for scrubbers,” said Jens Maul Jorgensen, Director of Bunkers at Oldendorff Carriers.

Jorgensen noted the German bulk carrier firm has been training its crew to operate scrubbers since more than a year ago and so far the company has not encountered any issues handling the equipment.

He added the company had already secured “a lot” of bunker contracts for high sulphur bunker fuel around the world, with the main bunkering port being Singapore.

In August 2019, Oldendorff Carriers further secured a 6,000 dwt bunker tanker dedicated to supplying its vessels with high sulphur bunker fuel at Singapore port.

“The operation has been very successful and we will still have that for years to come. So, with good and proactive planning, there has been no issues at all with availability of high sulphur bunker fuel,” he shared.

Though the price difference between high sulphur bunkers and IMO 2020 compliant fuels has not been substantial, Jorgensen said Oldendorff still managed to produce “good savings” when looking at the whole cost of the operation.

“If you do proper planning, then you're also saving money. And if you've secure good client contracts, then you don't get hit so much. I will say this is still looking very, very positive,” he explained.

“I would say the savings are there every day.”

Hafnia

“Our fleet and bunker pattern just didn't really justify doing scrubbers and thereby having to source high sulphur bunker fuel. And I do acknowledge that it makes sense for certain segments to use scrubbers but for us it didn't,” said Kasper Sørensen, Manager, Bunkers at Hafnia.

Sørensen shared that the company saw plenty of availability of IMO 2020 compliant marine fuel at the major bunkering hubs and even at smaller ports.

“And so I mean, availability wise it's been quite good. And obviously, if everyone can see the economical side of things the price difference between high sulphur bunkers and its low sulphur equivalents is not huge at the moment,” he adds.

“Our strategy is to secure term contracts wherever we see opportunities, in order to create some sort of stability of the quality of the fuel that we're getting.

“We also introduced risk limitation and procedures in order to ensure that we weren't putting all our eggs in one basket.”

Sørensen gave examples and explained Hafnia does not fully stock a whole vessel with one batch of fuel, and the company is constantly monitoring the data of suppliers provided by fuel quality experts.

“I think in this period with the new fuels and in this new market you could argue it's been a good opportunity mainly for bunkers suppliers to show their true colours and then for customers to find out what those colours really are,” he replied when asked about dealing with bunker claims.

“So it's a chance to shine, and it's a chance to fail. We've seen both approaches and luckily we've seen more of the ones on the positive side of things.”

Sørensen believed it would be wise for fuel buyers to establish stronger relationships, potentially even partnerships with bunker suppliers to be on the favourable side of a bunker claim.

“A lot of the time, bunker suppliers are just one part of the chain and they have to move the claim backwards towards cargo suppliers, and maybe even refiners,” he explains.

Total Marine Fuels Global Solutions (TMFGS)

“We have great data in Singapore because the Maritime and Port Authority of Singapore (MPA) produces the monthly bunker figures and we know bunker demand has stayed very robust in Singapore,” said Jesper Rosenkrans, Global Sales & Business Development Director at TMFGS.

“Maybe a slight increase, but certainly not a drop. Whereas in other parts of the world we've seen a pretty significant decrease in demand.”

Rosenkrans notes a trend which is more likely to stay is the pickup that the company has seen in Chinese bunkering volumes.

“Depending on the estimates and the source of estimates, bunker volume at Chinese ports is probably between 10 to 15%, up this year, despite the backdrop of Covid-19,” he shares.

“That's a trend that we will probably see continuing, that the Zhoushan Ningbo area will remain strong. And we're very excited that we've been able to enter that area together with our joint venture partner Zhejiang Energy Group, and we are already delivering bunkers through the TOTAL-ZEG JV entity, ZPMF.”

Moving forward, Rosenkrans believes Covid-19 has actually increased acceleration of interest in the newer types of marine fuels, such as liquefied natural gas (LNG) and biofuels.

“When preparing for IMO2020 we made the decision to focus on these cleaner marine fuels, and have intensified our strategic focus since,” he states.

“There has not been a shift in our business strategy because of Covid-19. We remain fully committed to cleaner marine fuels for now and for the future.”

Sing Fuels

“I think everybody was a little bit surprised in terms how fast things actually changed due to Covid-19,” shared Ulrich Hyldedahl Rasmussen, Vice President, Credit Risk Management at Sing Fuels.

“We are seeing bankers and we are seeing credit insurers pulling out. So I do foresee that the liquidity in the market in the future is going to change.”

The development means everyone will be reviewing their counterparties as a counterparty three months ago might not be in the same shape as now or in another three months’ time, he notes.

“So basically, the frequency of counterparty review is much more important now than ever before,” adds Rasmussen.

“I hope this will help drive change across the bunkering value chain for an increase in transparency.”

A series of SIBCON 2020 related articles have been earlier written by Manifold Times:

Photo credit: SIBCON 2020

Published: 9 October, 2020

Financial Result

CBL International gross profit down 32.2% on year for 1H 2024

Decline primarily driven by reduction in premium sold to customers; leading to lower gross profit per tonne even though there was an increase in volume sold, says CBL.

Published

2 days ago

September 13, 2024

Admin

CBL International Limited (CBL), the listing vehicle of Banle Group (Banle), a marine fuel logistic company in the Asia-Pacific region, on Thursday (12 September) announced its unaudited financial results for the six months ended 30 June.

CBL said its gross profit for the period was approximately USD 2.72 million, a decrease of 32.2% compared to USD 4.01 million for 1H 2023.

The firm said the decline was primarily driven by the reduction in premium sold to customers and led to lower gross profit per tonne, which was partially offset by an increase in volume sold.

CBL also reported its Consolidated revenue for 1H 2024 increased by 44.4% to approximately USD 277.23 million, compared to USD 191.96 million in the same period in 2023.

“This significant growth was driven by a 39.4% year-over-year increase in sales volume, attributed to the expansion of the Company's global supply network and higher marine fuel demand due to geopolitical factors,” it said.

The company announced the pricing of its initial public offering on Nasdaq Capital Market on 22 March last year.

“We are pleased with the robust growth in our revenue and sales volume during the first half of 2024, despite the challenging market conditions. Our strategic initiatives, including the expansion of our service network and our focus on sustainable fuel solutions, have positioned us well to navigate these challenges and capitalise on emerging opportunities,” said Teck Lim Chia, Chairman & CEO of Banle Group.

“While the current market environment has pressured our margins, we remain confident in our long-term strategy and our ability to deliver value to our shareholders.”

Other Financial Highlights:

Operating Expenses: Operating expenses rose by 64.0% to approximately USD 4.12 million, up from USD 2.51 million in 1H 2023. This increase was attributed to higher selling and distribution expenses related to our sales growth, strategic expansion in the Company's supply network to new geographic areas, and the development of our biofuel operations.
Net Income: The company reported a net loss of approximately USD 1.62 million, compared to a net income of USD 1.15 million in 1H 2023. The loss was driven by lower gross margin and higher operating costs.
Cash Flow: Net cash provided by operating activities was approximately USD 2.30 million, a significant improvement from a cash outflow of USD 7.24 million in 1H 2023, reflecting better management of working capital.
Cash position: As of June 30, 2024, Banle's consolidated cash balance increased by approximately USD 2.29 million, or 30.9%, to USD 9.69 million, compared to USD 7.40 million as of December 31, 2023. This increase was primarily driven by improved working capital management. The Company also reported a significant increase in accounts receivable and accounts payable balances, reflecting the growth in its sales activities.

Operational Highlights:

Global Network Expansion: As of June 30, 2024, Banle expanded its global service network from 36 ports at our IPO in March 2023 to over 60 ports across Asia, Europe and Africa. This strategic expansion has enabled the Company to secure new bunkering business opportunities, particularly in European markets where environmental regulations are increasingly stringent. The opening of the Company's new office in Ireland in late 2023 has bolstered our market coverage and enhanced local sourcing capabilities. Notably, the Company completed inaugural bunkering services through a local physical supplier in Mauritius in May 2024, further strengthening our market presence.
Biofuel Initiatives: Banle continued its commitment to sustainability by expanding its B24 biofuel operations, obtaining ISCC EU and ISCC Plus certifications in 2023. The Company successfully commenced biofuel bunkering services through local physical suppliers in Hong Kong, China, and Malaysia, positioning itself as a pioneer in sustainable fuel solutions. The B24 biofuel blend, which includes 24% UCOME (used cooking oil methyl ester), offers a 20% reduction in greenhouse gas emissions compared to conventional marine fuels, aligning with global decarbonisation efforts.
Response to Macroeconomic Environment: The global economy has shown signs of moderate growth in 2024, with emerging markets, particularly in Asia, driving this recovery. However, the shipping industry continues to face challenges such as fluctuating freight rates, port congestion, and disruptions in major trade routes due to the ongoing Red Sea Crisis. Banle has proactively adapted to these conditions, coordinating increased fuel supplies in Asian ports to meet heightened demand, ensuring that our customers' needs are met despite logistical challenges.

Looking ahead, Banle said it remains focused on expanding its market presence, particularly in the biofuel sector, and continuing to enhance its global supply network.

Photo credit: Essow on Pexels
Published: 13 September, 2024

Alternative Fuels

KPI OceanConnect expands Asia footprint with new Tokyo office

New office will help existing and new clients navigate increasing operational complexity in the marine energy sector, from new alternative bunker fuels to tightening environmental regulations.

Published

2 days ago

September 13, 2024

Admin

KPI OceanConnect expands Asia footprint with new office in Japan

Marine energy solutions provider KPI OceanConnect on Thursday (12 September) announced the opening of its new office in Tokyo, Japan, to strengthen its regional presence and support to local customers.

The office is KPI OceanConnect’s fifth in Asia, reflecting an increasing commitment to strategic growth in the region.

Japan is a leading innovator in the maritime industry, operating the third largest merchant fleet and is an important market for KPI OceanConnect.

The new office, led by Ken Kobayashi, Head of Japan, will help existing and new clients navigate increasing operational complexity in the marine energy sector, from new alternative fuels to tightening environmental regulations.

The announcement follows KPI OceanConnect’s recent publication of robust financial results for the year 2023/2024 and demonstrates its continued commitment to investing in building strong partnerships across the marine fuels value chain worldwide.

The expansion of the local team in Japan will enable KPI OceanConnect to actively engage with Japanese buyers and suppliers on a daily basis to exchange knowledge and expertise to support the development of innovative energy transition strategies for its clients.

The launch of the new office was celebrated with an opening reception on 10 September. The event was attended by the group’s owner, Nina Østergaard Borris and the Executive Management team of KPI OceanConnect, including Anders Grønborg, CEO, Dorthe Bendtsen, COO, and Jesper Sørensen, Global Head of Alternative Fuels and Carbon Markets.

To celebrate this milestone, KPI OceanConnect hosted an opening reception at the XEX Tokyo restaurant, just steps away from its new office in the Burex building. The event also featured music by DJ Yumi.

Anders Grønborg, CEO of KPI OceanConnect, said: “KPI OceanConnect has worked closely with clients in Japan for a very long time. As a key market for our sector and our business, this new office allows us to be closer to our customers and other important local stakeholders.”

“It is a time of transformation in the maritime value chain, and we are ready to work with our partners to identify opportunities for further collaboration and innovative solutions. We believe that our values of decency, good governance, transparency and long-term sustainability resonate well in this market.”

Ken Kobayashi, Head of Japan, KPI OceanConnect, said: “KPI OceanConnect is here to support its clients in turning today’s challenges and future uncertainties into opportunities for growth and innovation. From new fuels to new regulations, our network of experts is focused on delivering tailored, value-adding services to clients to future-proof their decision making, no matter the complexity.

“With a partnership-driven approach, we’re enabling greater transparency and innovation and are helping rewrite the bunkering playbook to support clients through the energy transition.”

Photo credit: KPI OceanConnect
Published: 13 September, 2024

Alternative Fuels

European shipowners and bunker fuel producers launch Clean Maritime Fuels Platform

Members of the initiative include ECSA, FuelsEurope, eFuel Alliance, European Waste-based & Advanced Biofuels Association, HydrogenEurope and Methanol Institute.

Published

2 days ago

September 13, 2024

Admin

European shipowners and bunker fuel producers launch Clean Maritime Fuels Platform

The European Community Shipowners’ Associations (ECSA) on Thursday (12 September) announced the launch of the Clean Maritime Fuels Platform.

The new Clean Maritime Fuels Platform is a bottom-up industry initiative aiming to enhance communication between the shipping sector and fuel producers and to identify common challenges and possible solutions, considering the implementation of the Fit for 55 package and the transition to a net-zero economy by 2050.

Members of the initiative include ECSA, FuelsEurope, eFuel Alliance, European Waste-based & Advanced Biofuels Association (EWABA), HydrogenEurope and Methanol Institute.

According to ESCA, access to clean maritime fuels is a top priority for the decarbonisation of the shipping sector.

The recently published Draghi report on the Future of European Competitiveness identifies shipping as one of the most difficult sectors to decarbonise, requiring around 40 billion in annual investments between 2031 and 2050.

The report highlighted that, while the EU is a world leader in sustainable renewable and low-carbon fuels for the decarbonisation of transport, it has limited installed capacity and planned production. The EU needs to start building a supply chain for clean fuels, or the costs of meeting its targets will be significant.

Representatives of ECSA, FuelsEurope, eFuel Alliance, EWABA, HydrogenEurope and Methanol Institute held their first meeting on 12 September and agreed on the objectives and the working principles of the new platform. Members also started to discuss the key topic of infrastructure gaps.

The platform will focus on policies and tools to support the production and uptake of clean maritime fuels in Europe including areas such as maritime in EU ETS and funding opportunities.

The platform will hold regular meetings with ECSA taking care of the secretariat’s tasks.

“Today, the shipping and energy industry join forces and launch a dialogue platform that can facilitate better flow of information about the common challenges we are facing. We need all hands on deck to make the energy transition happen. In order to meet our targets, we need clean fuels available in the market in sufficient quantities and at an affordable price. European shipowners are proud to launch with the fuel producers the Clean Maritime Fuels Platform”, said Sotiris Raptis, ECSA Secretary General.

“We are very excited to launch the Clean Maritime Fuels Platform today. Our 55+ members from across the EU are working tirelessly to produce waste-based and advanced biodiesel of the highest quality requirements and GHG savings to bring a new era of clean shipping to Europe. We believe that a closer collaboration between renewable fuel suppliers and ship owners will significantly reduce technical, operational, and financial barriers across the supply chain for the development and uptake of renewable maritime fuels”, said Angel Alvarez Alberdi, Secretary General of EWABA.

“The energy transition is a gradual journey, not an overnight change. It demands a robust regulatory framework and collaboration among all stakeholders involved to drive effective decarbonization. As we work alongside our 100 members through the complexities of this transition, the Clean Fuels Maritime Platform will play a crucial role in accelerating our shift to cleaner fuels and innovative technologies. By combining our collective expertise and efforts, we are not only tackling the pressing need for emission reductions but also laying the groundwork for a more resilient and sustainable maritime industry”, said Greg Dolan, CEO of Methanol Institute.

Photo credit: European Community Shipowners’ Associations
Published: 13 September, 2024