World Bunkering > News > Autumn 2009 > Challenging Times

Adrian Tolson

Independent bunker fuel suppliers have come a long way in the last 30 years. Today they are considered to be dependable global suppliers of quality products to the marine industry, having left their reputation as unreliable far behind them. In 2007, independent suppliers delivered 46% of worldwide marine fuel and now represent a viable and growing alternative to the major oil companies and state-run enterprises. Successful independents, such as Chemoil, are now regarded as key industry players that help drive market liquidity, setting benchmarks of excellence within the marine fuel sector.

In the late 1980s and early 1990s, rapidly changing energy markets provided an interesting backdrop for a new breed of independents with global aspirations to emerge from the shadow of the traditional suppliers of marine fuel – the oil majors. A series of nationalisations of companies, OPEC measures and the loss of small refiner subsidies in the United States forced a wave of consolidation within the oil majors that changed the competitive landscape for petroleum products. Many traders and independents entered the market at this point, seeking genuine opportunities to establish physical supply operations and trading businesses – some closed their doors as quickly as they opened but some of those with a distinctly different business model survived. Having remained, grown and globalised its offering, Chemoil is one of these companies.

Thriving – not just surviving

Established in 1981, Chemoil is now a leading global independent physical fuel supplier with marine fuel at the core of its business. Over almost three decades, Chemoil has continued to go from strength to strength despite varying market conditions, affirming the company’s core business strategies and securing its position as a market leader within the industry. Over the course of the last year, with the world’s economy in turmoil, many bunker companies have been focused, and remain focused, purely on survival. During this period, Chemoil has achieved major growth milestones, including the launch of its largest storage facility to date, the 482,000 cu m Helios Terminal in Singapore, while also commencing physical supply services in the world’s second largest bunkering port, Fujairah.

So how did the independents’ rise occur? In Chemoil’s case, success can be attributed to the company’s ability to exploit its knowledge of the bunker sector, its contacts and relationships to allow it to seek and find opportunities and adapt to market conditions over the years. Circa 2009, Chemoil boasts a flexible sales mix and diversified regional operations that set it apart from any other company in the sector. Flexibility by way of adapting Chemoil’s business strategy to focus on profitable sectors according to the ever-changing market demands has enabled the company to drive market change rather than be dictated by it. Chemoil is continually making investments that benefit its customers and enable it to be the marine fuel supply of choice in regions throughout the world. It is this passion and dedication that only independents can provide and that the marine supply industry deserves.

Size matters

But the days of solely being an “independent” guaranteeing a company’s success, particularly in today’s tougher global market, have gone. To be successful, we believe you require genuine international focus, significant scale of reach and also, very importantly, physical assets such as storage and barge capacity and financial strength. Chemoil, unlike most other independents, also has the capacity to arbitrage, procure, blend and transport products and components across the world within the time frame needed. In addition to this, Chemoil employs the highest quality individuals and also ensures that effective financial planning and risk management are part of its long-term corporate strategy.

Our strategy continues to be three-fold; firstly we are committed to building on our market presence by controlled expansion into existing and higher volume markets, as well as untapped markets with huge potential as Chemoil’s recent joint venture with Adani Group in India illustrated. Moreover, we are continually expanding and maintaining a dynamic range of products; Chemoil has been at the forefront of supplying high viscosity and low-sulphur fuel for several years. And finally, we are investing in operational infrastructure to improve the efficiency of our supply chain such as terminals and barges. We believe that having involvement in each and every stage of the supply chain, from sourcing and shipping products, to storage, blending and delivery, will ensure cost effective, quality products are available to our customers.

Storm ahead

The current global economic situation presents a myriad challenges for global trade and those whose function it is to facilitate that trade; shipping remains among the worst affected industries and is likely to be one of the last to recover. It is inevitable in such circumstances that there will be a period of consolidation from which the bunker independents are not immune, but therein lies opportunity for well-funded global companies such as Chemoil to seek opportunities as they arise, given the right circumstances. The colossal scale of the majors will help them survive these turbulent times, but not without rationalisation in perceived “non core” sectors of their business, such as bunkering, while smaller independents without such strength and liquidity in their finances may unavoidably suffer as a consequence.

Chemoil remains prepared for more tough times ahead in 2009 and 2010. The slow-down in global trade has meant near-term assessments are for reduced short-term bunker demand as ships layup to ride out the storm. However, we remain positive in our ability to deliver growth in the long-term, due to our flexible sales mix and diversified regional operations that leverage opportunities within both new and mature markets. Chemoil will remain committed to its vision of being the leading independent marine energy supplier in the market.