Singapore is THE epicenter of the bunker industry due to its strategic location. As all shipping traffic from most parts of Asia passes by Singapore when commodities are moved from west to east and back – it makes Singapore a very special and important shipping corner of the world. As being the largest market in the world, it makes good sense that almost any supply, trading and broking house is present in this fantastic city.
Naturally, Bunker One has one of its most important office locations in Singapore, and even though many physical trading houses have recently left Singapore, we stay! It is a fact that the bunkering industry has been through some turmoil during recent times, but we take that as an opportunity and a challenge, as Singapore is such a unique area for us. It simply cannot be neglected. It’s important to show agility and readiness to adjust your operations to the conditions of the market, which always have our constant focus.
On 1 January 2017, the Maritime and Port Authority of Singapore (MPA) imposed a demand on documentation on delivered tonnes by means of mass flow meters. The effect of this measure is that the market has become more transparent, and has made some players leave Singapore, as a transparent market has put a high pressure on margins and volume turnarounds.
Banks and cargo suppliers have naturally turned even more conservative on credit in the aftermath of these events, with physical independents experiencing greater operational difficulty as a result of the increased liquidity required. It also seems as if smaller physical suppliers have not coped with the growing calls for prepayment, COD purchases or requests for PCD quantum.
Some would say yes, and some would say no. Generally, Bunker One says yes. There has been widespread appreciation of how MPA has handled the situation. In many ways it is fine that the increased industry malpractices have been weeded out. The time was mature, and something had to be done. It is a relief that there is now a move to ensure a level playing field lending more legitimacy to the entire MFM system. On the flip side, it means more competition to fill this void, as others would do their best to take advantage of the industry rationalisation through a possible exit or restructuring of some firms, amid expectation of an improved global economic outlook. In the wake of the demand, MPA has also been rumoured wanting to reduce the number of licenses to a paltry 30 from the current 55. A couple of major suppliers’ decision to scale down and likely exit the physical supply business in Singapore constantly reminds every one of the extreme competition any physical supplier faces in. Now the market is slowly returning to the norm. What we see now is companies expanding their barge fleet – some by more than 200 % to win competition.
The last chapter in this story is still to be written.
But we are ready!
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