SIBCON 2020: Equatorial Marine Fuels provides view on local and global bunker markets post Covid-19
Choong Sheen Mao, Director of Singapore bunker supplier Equatorial Marine Fuel Management Services Pte Ltd (EMF), on Tuesday (6 October) shared the company’s outlook on the impact of Covid-19 for the Singapore and international bunker markets.
He also explained steps taken to establish EMF’s brand as a trustworthy company at the 21st edition of Singapore International Bunkering Conference, also known as SIBCON 2020.
Coming a long way as a home-grown brand, EMF currently operates a fleet of 19 bunker tankers, three floating storage terminals and supplies a monthly bunker volume of 450,000 metric tonnes at Singapore port.
Covid 19: Reversible and irreversible outcomes for the bunker industry
Shortening credit terms:
Increased uncertainty in relation to credit risk in the bunker industry due to Covid-19 related problems, has caused many shipowners to be concerned about shortening credit terms. In the past, the normal credit term was 30 days, but now it’s not uncommon to see a request for 15 days or cash in advance.
Pre-Covid-19, a crew change could be done within two or three days. Now, shipowners will have to plan two to three months in advance. In fact, crew change has become a critical factor in considering which port to bunker at. It has caused operational expenditure to increase as shipowners now have to consider which ports to divert to in order to facilitate crew change.
Shipowners prefer ports with MFMs:
EMF has observed shipowners now prefer ports which enforce the use of mass flow meters (MFM) such as Singapore. The company has received reports that because of Covid-19 related restrictions in other ports, shipowner’s surveyors, or owner’s representative are not allowed to go onboard ships during bunkering. As a result, ship owners and bunker suppliers can only rely on the figures reported by the ship’s crew.
With an MFM in place, one would be relying on figures provided by the mass flow meter, which is a neutral machine, and thus the industry finds it more to be more transparent and reliable.
De-globalisation is a very real issue and a side effect of Covid-19 related lockdowns. This does not mean international trade will come to a halt, but rather that trade patterns will pivot towards regionalisation. Shipowners will now have to plan differently and consider how to divert vessels, bunkering ports, and even the amount of bunkers to procure.
Higher trade barriers:
Smaller bunker suppliers and traders are going to face much higher trade barriers due to shrinking credit lines provided by banks. So, what happens next? More consolidation in the market is expected as banks look to reduce their exposure in the current environment.
EMF sees trust between industry stakeholders as one of its core values as a company. The following are some steps taken by EMF to increase transparency and accountability to establish confidence in its brand:
Compliance with all regulations introduced by the MPA: Straightforward, but not easy to enforce as there are numerous steps such as ensuring all mass flow meters are constantly and properly calibrated, crew are well equipped and trained to implement said regulations.
Transparency with banks: Making sure that the company is ‘audit-ready’ at all times. EMF even allows banks to speak directly to its customers and remains proactive in communications with its banks in order to allay their concerns.
Pre-testing cargo for customers: EMF takes the initiative to pre-test bunker fuel and shares the test results with its customers in order to give assurance that even before the bunkers are loaded onto their vessels, quality is ensured.
Online bunker tracking tool: EMF recently launched a new online tracking tool known as OTT, where its customers can have real time access to information regarding bunker delivery. All documents like quality certificates and bunker delivery notes are consolidated on one platform to increase transparency with its suppliers and customers.
Digitalisation: EMF embraced the digitalisation and has had its own digital technology department since 2018. EMF invests in increasing the digital literacy of its workforce in order to future proof its operations.