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Sing Fuels was Featured in Bunkerspot on ‘Major Comeback' Forecast for Bunker Trading Houses
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By: Gabian Chew, Bunkerspot
‘Major Comeback' Forecast for Bunker Trading Houses
'One thing is certain - the current business models for suppliers and intermediaries will not work as we enter a new decade,' Head of Sales & Business Development (North Europe) at Sing Fuels tells Bunkerspot.
It is only a matter of time before bunker trading houses make a comeback, believes the Head of Sales & Business Development (North Europe) at Singapore-based bunker trading firm Sing Fuels.
Nils Flemming Rasmussen explains that the bunkering industry is now facing a trend of suppliers continuously reducing credit exposure towards certain ship owners and segments.
The development, in time, will leave a gap to be filled when increased bunker prices add additional pressure to already limited credit lines.
'The question is: Who will fill this gap? The answer, of course, are the traders,' he tells Bunkerspot.
'So I think from a credit perspective, the bunker trading houses, combined with much needed consolidation in the bunker trading industry, are in for a major comeback in the years to come.'
Rasmussen, meanwhile, says the present model on the way business is conducted within the bunkering industry needs change.
'One thing is certain: the current business models for suppliers and intermediaries will not work as we enter a new decade.'
He notes certain ship owners refraining from using bunker traders and only dealing with physical suppliers in the wake of the OW Bunker collapse, in order to reduce risk of having double payments should a trading firm goes bankrupt.
'In my view these buyers may be seeking a safe haven which is in fact no safer than the one they are trying to steer away from,' highlights Rasmussen.
He notes of a general misconception among bunker buyers who assume that the invoice pledging issue with banks does not apply when a company is acting as a physical supplier - which is not necessarily the case.
'If a physical supplier is pledging their invoices to a bank, the bank and the bankruptcy estate may both be pursuing the same claim in the event that the physical suppliers go bankrupt,' he explains.
'In other words this financial model presents an added potential risk to the buyer.
'The same goes of course for the traders who also pledge their invoices.'