This year has highlighted the need for trusted, expert marine fuels partners
Twelve months ago, we all thought that IMO 2020 would be the biggest challenge the shipping industry would face this year. Some people predicted that it would be as significant as when vessels switched from coal to oil causing an anticipated and unprecedented level of disruption.
Many of those predictions have not came to pass, but – as we are all aware – there hasn’t been any shortage of challenges this year. 2020 has been a year of unexpected disruption impacting all aspects of life and work, and the marine fuels industry has been no different.
The Covid-19 pandemic has had an impact on the price of crude oil, and the price of oil derivatives. As sectors across the maritime and land-based industries were forced to rapidly cut activity overnight, demand fell significantly. It is easy to forget that this rapid change coincided with disagreements within OPEC+ further forcing down the price of crude.
This combination of reduced oil demand due to Covid-19 and oversupply throughout the year created a huge glut of both crude and refined products. Even as vaccines near widespread roll out, we’re unlikely to see this oversupply abate entirely during the first half of 2021; not least because countries like Venezuela, Libya, and Iran with huge crude reserves are still effectively ‘offline.’
Volatility is nothing new in the marine energy sector. It is also a fundamental reason why it pays to work closely and consult your marine fuels supplier to help manage this risk for you. Reduced volatility reduces the cost of capital. Knowing there will be no abrupt cost rises means that shipowners and fuel buyers can more easily plan ahead; and by smoothing out revenue and expenses they know they won’t need to borrow on unfavourable terms because they’ve got good liquidity.
There are more twists and turns ahead. Predicted issues with marine fuel quality and availability may have proven unfounded during this year, but there is risk that problems were simply masked by the current glut of oil in the market. We may see some of these problems rear their head in some regions once more as things return to ‘normal’ at some point next year. The bunker trading market is becoming increasingly complex, with regulation, availability, price volatility and the fundamental transformation of the marine energy supply chain. It makes tapping into the knowledge and insight of experts, and clear planning even more important.
This also formed part of the reasoning for the merger of KPI Bridge Oil and OceanConnect Marine to create KPI OceanConnect earlier this year. Our new company brought together a wealth of knowledge and expertise, new ideas and ways of thinking, and a renewed energy to a changing marketplace. We have created a company that is a trusted, expert partner across the industry – helping shipowners and charterers plan for and navigate the challenges ahead.
There’s no shortage of trials ahead for the maritime industry, but I’m incredibly optimistic about the company we’ve built and the value we provide. The industry may be transforming but we are ready for that change, and ready to work shoulder-to-shoulder with our customers and partners to help them seize the opportunities that change always brings.