Do you know the different ?
Its very important to understand who we buy bunkers from as it reflect directly into our counter party risk, the famous OW case few years ago illustrated the importance to manage the mentioned risk or else you might face double paying on your bunker bill, in general, there are 3 type of supply channels you will face :
1. Physical supplier
There are many definitions of “physical supplier ” in the industry : the company on the BDN, the company who OWN the barge, here just for simplification i will define it as the company who “control” the barge while doing the delivery. The good part of buying direct from physical supplier is you are highly likely to get the best price as there are no trading margin / broker fee included. The downside is generally harder to get credit direct from supplier and normally they can only serve you their physical port ( not all many physical supplier now doing trading also )
2. Trader
A trader is the middle man who buy from supplier and sell it to you so there will be 2 contracts involved. A trader normally can offer most of the bunker ports in the world and easier to get credit. The downside of working with a trader is mainly the counter-party risk, like OW case few years back, if you pay the invoice and the trader have some financial difficulty and didn’t pay the physical supplier, the physical supplier might take legal action against the vessel and thus arise many legal / operation problem in different ports and legal system.
3. Broker
A broker is the middle man who quote the enquiry to you but the credit / invoicing is done by trader or physical supplier. A broker fee is involved for every transaction, some might take it from client side, but mostly will be involved in the supplier side. A broker could assist you getting price / setting up credit with supplier across the globe and should provide professional advice on different issue like port planning / operation enquiry / quantity-quality concern etc.
Its hard to say whether the best strategy is to work direct with physical supplier / trader / broker, its highly depends on the working style and conditions for your company as you might not get credit from physical supplier and thus need to go thru trader ; some blue chips client ONLY work direct with physical supplier ; some company prefer work with exclusive broker like outsourcing the buying department. Knowing the different between all and make an informed decision to achieve your desired outcome !
Register here for the full guide : <CLICK HERE >
<This is a personal blog. Any views or opinions represented in this blog are personal and belong solely to the blog owner and do not represent those of people, institutions or organizations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.
All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. >
