Bunker suppliers should adopt a new approach to doing business, Monjasa boss says

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The bunkering market is rapidly changing these days. Competition is increasing, bunker prices have been very volatile, while the IMO2020 regulations are expected to introduce a new status quo in the market. Further to these developments, Manjasa’s CEO, Anders Ostergaard, believes that “the old way of doing business is falling apart”.

According to Ostergaard, “the time is ripe for bunker suppliers to adopt a new approach to doing business”. In this new era, which Ostergaard calls “Bunkering version 2.0”, bunker suppliers will need to act with higher flexibility, show bigger transparency and remain financially healthy, in order to survive and expand.

In such a turbulence environment, there is not a long-term strategy any more, Monjasa boss says. The bunker suppliers need to follow the daily or weekly developments in the market and then remain flexible. Bunker fuel is a mainstream commodity and therefore each company needs to find areas that can really make the difference in order to achieve excellence.

Furthermore, after OW Bunker’s collapse in 2014, the credit requirements have become stricter, Ostergaard says and this situation is expected to magnify after the IMO2020 regulations go into effect, since more and more small suppliers may enter the market. Therefore, the significance of transparency and financial stability is increasing.

In its effort for higher transparency, Monjasa has decided to publish its audited financial results on its website; a practice which is very rare for private entities and especially for bunkering companies. Moreover, the financial results showed that the company has maintained a high solvency ratio with the value of assets being much higher than its outstanding debt. This makes Monjasa a stable company, which operates in a volatile market, Ostergaard notes.

What it appears from such Monjasa’s strategy is that transparecy and financial stability are not only welcomed by the company’s buyers but also by the financial institutions. According to Ostergaard, Monjasa’s strategy has lead to its first credit facility by a major financial institution – JP Morgan Chase, plus a $80m credit facility from Societe Generale.

While transparency is going to play a major role, companies will need to give higher value on the ‘what you see is what you get’ principle. “We choose to look at the advantages of showing our underwear. It’s all about transparency, so of course it helps with lenders.” Ostergaard concluded.

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