Bunkering, Market Outlook, Global Challenges and the Future of IBIA

World Bunkering’s editor David Hughes recently had the opportunity to ask newly elected IBIA Chair Adrian Tolson about his career in bunkering, views on the current market and global challenges, and his hope for IBIA’s future

DH: You are a very experienced participant and observer of the bunker industry. Could you sketch out how you became involved in bunkers and how your career progressed.

AT: This last April marked my 40th year in bunkering! Quite a surprise for me after leaving university and embarking on five years in the wine and liquor industry that took me from Harlow, Essex to Napa Valley, California.

Anyway, to cut a long story short, a response to a job advertisement in The Wall Street Journal led me to an office in San Francisco that belonged to Bob Chandran, Owner and CEO of Chemoil, and so began my career in bunkering.

To this day, I maintain I was only hired because Bob wanted to buy a winery, but that dream soon came to an end and my career in bunkering began. I worked for 25 years at Chemoil, then the largest independent bunker supplier in the world, in various roles of increasing responsibility, which is where most of the industry got to know me until I left in 2011, one year after the company was acquired by Glencore.

The following four to five years were spent at very large companies that all seemed to go bankrupt or get close to bankruptcy.

None of it was my fault but it provided enough incentive for me to become my own boss and start a consultancy business in early 2016. This is now 10 years old and happily I seem to have a great relationship with clients and non-clients alike!

DH: You have been closely involved in IBIA for many years and are now its chair. Why is IBIA so important to you?

AT: Actually, my involvement with IBIA is relatively new phenomenon. Chemoil was active in IBIA from its earliest days but with IBIA being UK-focused in those days our engagement (we were headquartered in San Francisco) was quite limited. For me it was the realisation at the beginning of the last decade as to how valuable IBIA could be on many levels for a startup and even a sizeable business. Initially, it was mostly about gaining connections to different parts of the marine fuel value chain and IBIA’s engagement at IMO was also very valuable to me.

I had spent many years strongly expressing my opinions on the industry and finally friends and colleagues suggested (perhaps to improve my level of humility!) that I might want to run for the IBIA board. The freedom of running my own business really helped in my decision-making, which is why I still feel that individual members are hugely important to IBIA. Anyway, I ran for the board first in 2019 and failed to get elected which was a blow to the ego! I ran again in 2020 and made it, only to join board as the world shut down and went to Zoom. Constantinos, our former Chair, and I still joke that our first two years on the Board were spent with no in-person meetings! Still a lot of good work was done at this time, engaging at IMO and decarbonisation activity, not to mention strengthening IBIA’s finances to weather the covid storm and well beyond.

It goes without saying that succeeding as IBIA Chair is a great honour, especially at a time when IBIA’s role in the marine fuel supply value chain and as a global maritime association has never been stronger. There is, however, still significant opportunity ahead for IBIA on many levels.

We have the chance to become even more active as a global representative for the industry, not only at key forums such as the IMO and the EU, but also by strengthening engagement with port authorities and governments around the world. Our close relationships with the MPA and, more recently, with the Port of Rotterdam demonstrate the value we can bring through collaboration and dialogue.

The workings of our industry have been relatively opaque in the past and for this reason our contribution and importance is only just being recognised. By continuing to improve transparency and communication, we can further strengthen our position. In particular, increasing awareness among local regulators and administrators will be an important focus for IBIA as we move forward.

DH: How has bunkering changed over the years since you have been in the industry. In particular, how have relationships between the various players changed? Does it make sense to talk about oil majors, independents, traders, brokers and suppliers anymore?

AT: At the beginning of my career, we only talked about majors, independents and brokers. Majors had their own refineries or exchanged fuel with other majors that had their own refineries, and some refiners also sold fuel to independent suppliers.

The term commodity trader hardly existed and although Marc Rich & Co had already opened its lucrative business with Iran, the bunker business had little interest for them or similar types of companies. Suppliers either dealt directly with buyers or via a global network of regional bunker brokers that serviced locally owned fleets.

Fast forward to this century and the industry had already changed.
Majors had in many areas divested from refineries and no longer pursued bunker buyers whose companies in many cases were both fragmented and challenged financially. Independent suppliers had seized market share but were often limited in their marketing efforts and always tight on credit.

Along came innovative bunker trading firms that emerged as aggregators of demand and providers of credit, companies that rapidly replaced or absorbed the bunker brokers of the previous century.

Today the market structure is very different, majors have limited refinery production and even more limited retail bunkering operations. Commodity/oil traders dominate in supply, selling to smaller oil companies or via their own retail bunkering operations. Independent suppliers still exist but, in many cases, they have merged into bunker traders as so called “hybrid” suppliers. Bunker buyers who were once relatively weak and small have grown in size and sophistication, particularly when it comes to alternative fuel strategy. Today they assert more power, demanding better quality and transparency than they had in previous decades, combining not only by mergers but also, via purchasing pools.

The old delineation of tightly defined bunker supply chain roles is not what we see today. For example, commodity traders, bunker traders and even shipowners now take part in retail bunkering. IBIA’s growth is closely linked to this evolution, as stakeholders across the value chain increasingly take on multiple roles and recognise how interconnected the industry has become. In this context, IBIA stands out as the one entity uniquely positioned to represent all participants across this value chain.

DH: IT and now AI are transforming the technical aspects of bunkering at all levels. What are the consequences for the industry?

AT: I think our industry has only really touched the tip of the iceberg as far as digitalisation is concerned. We join shipping in being backward in this respect as industries that feel uncomfortable removing the personal touch from our transactions or sometimes even our paperwork. So, while we see small elements of transformation, I don’t think even widespread adoption of E-BDNs can be called anything more than a minor leap. Much more is needed and much more is to come.

IBIA is actively leading the industry towards this future. We are blessed to have a very active and successful Digitalisation Working Group composed of those who recognise the industry challenges but are both committed to and engaged in moving forward.

Realistically though our digital transformation is slow, we will see much more with planning, operations and financial record keeping before we see automated bunker transactions. They will come, and one day trading or buying bunkers may indeed be done by computers, but the race is on to see which comes first, the full transition to low carbon or zero carbon fuels or the full automation of the bunker transaction, perhaps they arrive at the same time?

DH: Decarbonisation has been the driver of change for several years now. Do you believe progress has stalled?

AT: No. Even the strongest opponents of the IMO’s Net Zero Framework don’t’ believe this. Shipping is still committed down a decarbonisation path. Some may have reasons to try and delay the trajectory or have different solutions, but the planet will decarbonise and it’s clear the majority of the world’s population wants this. The challenges at IMO during recent months have slowed progress in shipping but we will still see energy transition even if delayed from original plans.

IBIA will remain focused on this journey, engaging wherever these discussions take place and representing the industry throughout. We are committed to this path and, while we recognise that the years ahead may present greater challenges, we will continue to engage constructively with regulators and governments whenever and wherever possible.

DH: Given the many challenges facing the industry, what do you see as IBIA’s priorities for the next few years?

AT: Hopefully it’s clear from my previous answers that we recognise that IBIA is the only industry body able to engage with governments, regulators and other NGOs to both explain and educate them about this vital $200 billion industry. Our plan is to provide input to their decision-making regarding all aspects of bunkering, reaching naturally into their plans for decarbonisation.

Industry knowledge and education are one vital input IBIA can provide to regulators, but it is also important that we, as an association, lead in training both new entrants and the veterans of our industry. Training the value chain for its present and future roles will continue to be part of IBIA’s core focus. This level of engagement or education cannot be achieved without investing in our Secretariat. We are committed to raising the industry knowledge of the existing Secretariat and we will add key members where we need them.

None of these goals can exist without a continued focus on membership. Of course, it is important to add members and that priority is always there. But it is also very important to be reactive to our membership and understand their needs in today’s bunkering market. Our membership is evolving every year as we welcome new members from the value chain, and in today’s world, the new entrants are often disruptors to the status quo. While at times we do provide guidance and leadership to our members, at other times, we need to learn from and listen to them.

I am always struck when meeting with members that they have very strong ideas on which direction IBIA should take, with many ideas and suggestions for new working groups focused on industry issues. In recent years, we have significantly increased the number of buyers that are active in IBIA and it’s clear that many of them need a forum to share their concerns and ideas. For this reason, we are highly supportive of the new
Buyers Working Group that is a key initiative of our past Chair, Constantinos Captenakis.

There are lots of challenges to come in this very complex geopolitical world. IBIA’s Board and Secretariat recognise these as do many of our members.

Looking ahead, I remain optimistic about what we can achieve together. The bunker and marine energy sectors have always demonstrated resilience and adaptability, and those qualities will be essential as we move forward. By building on the strong foundation already in place and continuing to evolve as an association, IBIA is well positioned to take the next step.

Adrian Tolson
IBIA Chair