Last week a client send me a bunker enquiry in a south Asian port, after a while they feedback me the shipping agent is quoting a much lower price with credit terms , and he want to know – “Should I just fix with my local agent ??”
In first glance, there are some benefits of fixing with the ship agent
- They are local agent involved in the operation , who is working closely with physical suppliers, the work flow should be much smoother instead of trader > supplier <>agent.
- Now they can offer lower price with “same” products guaranteed by other traders.
- They can provide same credit terms or even longer than the usual traders, making their offers even more appealing
However what are the downsides ?
- In most case shipping agent can only offer with cash in advance basis , in that sense there will be risk of (1) Will the bunker be delivered after you remit the funds ? (2) Will there be any follow up in case the bunkers is off spec ?
- Worse case scenario – you only purchase 20MT LSMGO, what if the bunkers is seriously off spec (like flash point) and you have no choice but to debunker in next port with significant amount of demurrage cost + new bunker cost , while its easier for the agent to close down the company and reopen another new ventures to avoid such responsibility ?
Always consider counterparty risk while attempting for the lowest offer ~
Until next time
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