With the growth of digitalisation and increase of transparency in the overall bunker fuel chain, more and more ship operators are looking to fix bunker supplies directly with oil suppliers, cutting out bunker traders and other intermediaries.
This trend, which the bunker fuel consultant Adrian Tolson (
20|20: Marine Energy) has characterised as “disintermediation”, was basically introduced after the bankruptcy of the Danish bunker trader OW Bunker and it is recently increasing probably in view of the 2020 low sulphur regulations; amid many market debates and concerns for higher risks involved in consuming off-spec, contaminated or incompatible blended fuels, ship operators feel more confident to deal directly with oil majors or oil producers instead of intermediaries.
Further to this disintermediation, the traders’ margins are put under pressure. In many cases oil majors and other producers are now selling at prices same or similar to that of bunker traders. Therefore, even if a stem is fixed, it is not enough for bunker traders to make profit if they work on spot back-to-back basis. Alternatively, taking future market positions, by buying or selling short, remains an option however even in this case the traders have to bear the market risk.
As a result of the new reality around the bunker traders’ role in the market, we have seen many of them to announce lower profitability during the years or even experience severe financial difficulties. During 2018, Aegean Marine Petroleum filed Chapter 11 and it is now under restructuring, while other top-ranked bunker traders such as Brightoil and Macoil have hit the news due their financial problems.
In order to overcome such a negative situation, traders are forced to trim their operating expenses in an effort to improve their results. According to an opinion, while bunker traders still make money, they look overstuffed nowadays that the trading activity has been dropped. Their productivity has to change, if they want to survive in such a changing environment.