Page 198 - ΝΑΥΤΙΚΑ ΧΡΟΝΙΚΑ - ΜΑΙΟΣ 2023

MARKET NEWS

The marine fuels market is undergoing significant transformation, and understanding
the financial health of counterparties is vital to minimising risk.

EFFECTIVE COUNTERPARTY

RISK MANAGEMENT

STARTS WITH ASKING THE

RIGHT QUESTIONS

The best place to start is to ask the right understanding the financial health of
questions of your counterpart and build a counterparties and increasing transpar-
transparent, trustful relationship. ency is vital in order to minimise risk and
exposure. There needs to be increased
Today’s high fuel prices, inflation, increas- due diligence within the fuel supply and
ing interest rates and constrained credit, transaction process where there is a
in conjunction with the transition to detailed understanding and in-depth risk
cleaner sources of energy, is creating assessment of the financial strength of
volatility and more risk within the marine the companies that you are dealing with.
fuels market. This is having an impact on
credit availability and raising the spectre Each business is unique and will require
of more disruption amongst marine fuel its own strategy, but in the aftermath
companies. of OW Bunker, BIMCO created a list of
questions that it recommended marine
Another trend that KPI OceanConnect fuel buyers ask their counterparty before
has recognised in the marine fuels market contracting with them. Along with the key
is the increasing numbers of traders question of pledging, they also included:
acting in a single chain. This increase in Who are you dealing with and who is the
the counterparty chain can be a chal- legal entity? What terms and conditions
lenge for ship owners. If there is a mis- will you enter into? Does the counter-
match in the payment terms between party have credit insurance? Is the coun-
the physical supplier and the end cus- terparty covered for product liability and
tomer, small traders will have to include have professional indemnity? Does the
another trader in the counterparty chain counterparty have a compliance pro-
to be able to finance the end customer. gramme? And, is the counterparty finan-
This creates a high level of uncertainty cially strong?
because it reduces transparency as well
as efficiency and also increases risk for These questions are all equally sensible
both buyers and suppliers. and important. If an owner asks a pro-
spective counterparty these questions
In addition, shipping’s green transition and gets credible answers and support-
requires ship owners and operators to ing evidence, it provides a level of con-
choose from a growing portfolio of prod- fidence that are working with a viable
ucts. Choosing the right pathway for each partner.
vessel will require financial and techni-
cal analysis. For some, this will be mostly Marine fuel providers have a key role to
related to capital access or claims and play by providing counsel and a clear
invoice handling, while for others there pathway for the solutions available on the
will be a greater focus on the transpar- journey to a decarbonised shipping world
ency requirements that enable access to in 2050 and beyond. Partnering with a
by Michalis Manassakis, credit and insurance. transparent, innovative partner is critical
Managing Director at KPI OceanConnect As the marine fuels market transforms for shipowners and operators looking to
in Athens
and becomes more complex and volatile, be guided through this evolving market.

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