2017 Will be a Healthy Year for the Bunker Industry: Muhtaroglu
After a number of difficult years, 2017 will be healthy year for bunker industry, Mustafa Muhtaroglu, the founder of Turkish physical supplier Energy Petrol, has told Ship & Bunker.
It will also be a year characterized by significant change, he says.
“The bunker industry has faced almost everything in recent years. Starting with the collapse of OW Bunker, we have seen several bankruptcies, changing regulations, repositioning of players, and most recently well publicized cases of fraud. These have taught all of us many things,” said Muhtaroglu.
“But I believe the change this year will be mostly driven by the buyers who now know much better who is who in the bunker industry, and the importance of bunker supplies towards 2020.”
“We have a saying in Turkish that we learn by experience, and I understand that it is quite common in our industry that all parties in bunkering are only learning by living. I think after what we have lived through and learnt in recent times, it promises to be a very healthy 2017.”
The End of Many Things
The bunker industry has changed significantly over the last decade, and while not all of this change has been for the better, Muhtaroglu believes 2017 will see “the end of many things” that have been less positive for the industry.
“I think telemarketing style bunker selling will not be very popular any more and going forwards, only professional, value adding, experienced bunker sellers and suppliers will be respected and supported in the bunker markets,” he said.
“Most of the good buyers now have very clever bunker desks that seek and support knowledgeable bunker sellers and suppliers, and that provide fast and flexible solutions combined with good service. They know very well who gives what.”
“I know some bunker sellers that do not even know where a specific port is even in his own country; moreover they don’t even know the simple supply chain and economics of the products they try to sell! These types of sellers can not provide any added value to buyers and I think they have no chance of survival in what will be a new bunker market concept. Buyers simply do not appreciate or want to support such a situation, and that is why they will drive the restructuring of bunker market.”
But perhaps most importantly, Muhtaroglu says that an increasing number of people now see bunkering not as a commodity trade, but as a service business.
“Only good service providers who respect their clients will be long term actors, the rest will disappear. Buyers now better calculate how much bunkering costs them – not just the cost of bunkers per tonne, but by all details across the entire supply process. This total cost will be the main concern for them, especially when shipping markets are doing better,” he said.
“So it will not only be product prices but service and quality that matters and will ultimately define future market direction. Players must invest accordingly and understand what buyers are looking for – a full package of knowledge, service, respect, and professionalism.”
The players who provide all these things will do well, he says, but warns that there will be consequences for those who, inevitably, do not.
“There might be not be an OW-like disaster ahead but the market is already being restructured every day and there are some bunker companies that are already not healthy who are simply just trying to survive. The market does not need them, and in time they will become inactive,” he said.
“However, some leading players have already seen these changes coming and have already restructured, while others still will only realize it once they see fewer clients calling them. But ultimately, bunker buyers know much better now what they want, which is why they will be the main agent of change for the bunker market.”
As to how this philosophy has translated into his own business, Muhtaroglu stresses not only Energy Petrol’s achievements for 2015 and 2016, but the company’s mantra going forwards.
“After we achieved 38% growth in 2015 our aim was to keep this position, and thanks to our clients we not only managed this, for 2016 we actually increased it by 6%! However we are not a company concerned by volumes; we are a supplier who is concerned with quality and service,” he said.
“In December we did 217 supplies with 37,000 tonnes of product physically delivered to ships, and for 2016 as a whole we supplied over 2,200 ships without a single quality or quantity claim, or any delays. This is something very much appreciated by our clients.”
“We are investing for our business and after acquiring two more modern barges we are now number one among the active suppliers by number of bunker barges under our control – 13 barges in total. This includes the highest number of modern young double barges and also the largest capacity fuel oil supplying tanker in Istanbul, the 3,659 dwt m/t Deniz M.”
“Most importantly we make these investments without any cash bank credits used, so we have no debt. This makes us financially a very healthy supplier. We also do not also pledge our bunker invoices and finance business by our own capital, giving our clients a very reliable, solid, safe, and first class supply chain. This significantly reduces risk for our clients.”
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Source: Ship & Bunker
