Respect and honor in business is our business
By Irene K. Notias, Prime Petroleum Services
The terms honor, trust, integrity, respect, teamwork, gentlemen’s agreement refer to qualities increasingly missing in today’s bunker business, but nevertheless everyone claims to adhere to them.
Customers look for reliable suppliers while suppliers look for financially stable customers. Brokers connect the two and act in the best interests of both parties.
As a broker for over 16 years, I have always shared transparently much information and educated many novice bunker buyers about what I learned from previous expert buyers and the industry as a whole. I am fortunate to be given the opportunity to communicate my experiences in the field of bunkers for the single purpose of improving the efficiency and cost effectiveness for the customer’s benefit first who is the key foundation of any business and the supply chain’s benefit in order to sustain itself well enough to be able to support the customers’s needs. After all, that’s the only way it works. I will begin my series of articles by introducing who is who and what is what, factually. I begin with the bunker brokers who serve a distinct purpose in the bunker chain and especially at this time offer valuable services. Yet they seem to be underestimated and occasionally “used” or “overlooked” without anyone really acknowledging the ethical commitments towards a reliable broker.
They connect end users to the bunker supply chain, fuel traders and physical suppliers, and they must be alert, aware, totally informed, transparent and remain independent, at all times. In order to do this well they must work diligently and effectively, aiming for long term relationships. This takes time, energy, and financial resources.
A reputable bunker broker is all of the above and will have years of documented experience of effective work for portfolio of a reputable client. In addition, must have established long-term relationships with all members of the industry, sustaining a pristine reputation for credibility & know-how of the bunker industry dynamics. In order to achieve this and hence provide these assistances to the rest of the industry, it is imperative that their diligent work is not interrupted and the relationships not trespassed.
Of course, credit information is available from business analysts’ reports which are easily purchased, but the actual experience of a broker with a long-term successful client relationship is undeniably the best referral, and it is free.
In the recent years, there has been many incidents of bypassing and misuse of a broker’s services, upsetting this balance of trust. As world trade and demand decreases, competition increases. So much so that some would risk their integrity to save or gain a buck.
It is understandable that some owners often allow suppliers to come directly to them because they think that by bypassing the broker they save on commissions. From experience, such thinking is misguided. As previously mentioned the broker is instrumental in shielding an owner from many unknowns and offers relatively free support from the beginning to the completion of the bunker inquiry process, besides his whole network, which without it the buyer would have not known who to contact and who he was contacting (reputation wise).
In an article in the magazine Dockwalk (for Captains and Crew) “Why use a Bunker Broker?” Dec. 23, 2009, its author, Mr. Bransom Bean, states: “But there are times when do-it-yourself is not the best idea. Buying bunkers is perhaps one of them, especially if you happen to be in an unfamiliar port or up against a tight schedule.”
A bunker broker service can also assist suppliers and traders for the same obvious reasons, it helps clients. Mainly, by screening potential customers and providing information on payment performance based on actual experience with a credit worthy customer. Bunker brokers are filters for the suppliers and traders, weeding out the trouble makers or losers. In 17 years, as a bunker broker, I have provided ample reliable credit information to the bunker sales sector about several esteemed Greek and New York ship owners and companies. On our word, we have in cases, been able to secure credit for owners who have been of late paying with delays due to interruptions in their cash flow from weak freight market and/or non-performing charterers. In difficult times, a broker is an important voice on behalf of an owner.
Brokers monitor payments for both supplier and clients to ensure smoother payment performances. They are like the chorus in a Greek tragedy, reminding every one of the rules and dynamics. Besides offering port info, price indications and port comparisons, they do all the follow-up and after sales including claims handling.
While an owner may silently participate or pro-actively seek to cut out the broker, the savings are minimal and lost in so may other ways.
The Owner may have saved 50 cents on a bunker stem, but may have overpaid for the stem itself.
In speaking with a ship owner on whether they would bypass a broker who showed them a cargo that came from a shipper that was known to them, their response was enlightening. The owner said, no. And, he went on to explain that it is in many cases, better to have a person in the middle, because it allows for better negotiations on the freight and it also is valuable in the event of a dispute.
Nevertheless, it is prevalent to find owners & suppliers bypassing the bunker broker. There is the innocent bypassing of needing to save the commission.
It is quite a frustrating event. In years 2014-15 two major fuel companies reached out to the customer of an authorized broker and bypassed their own colleague point blank, hurting the brokers business and the major oil companies’ reputations for ethical conduct.
The premise of this article is about the frustrating kind of bypassing when all the homework and legwork has been done by the brokers without commensuration and the owner then turns and gives the business directly or to someone else.
Like in the jungle, it’s survival of the fittest. But, this in the end is defeating to the owner.
There is a reason why an owner went to a particular broker to get the legwork done in the first place. The brokers contacts, reputation, and abilities to procure the best results.
Did the owner think of the consequences?
It is damaging to the broker, demotivating to the staff … and damaging to the broker’s reputation.
At first, this may be of no concern to the owner, but in the end, the broker’s reputation is what has helped the owner get the service and best price in the first instance. It shows weakness of the same party that the owner needed to be strong to achieve the desired price and terms on his behalf.
Maybe a broker should not make the good faith effort to enhance their owners’ reputation and buying power thru face to face meetings with suppliers.
On one occasion, a supplier was invited by the broker to attend a meeting for the purpose of building a business relationship with a particular owner. Appointments arranged, agenda put forth spelling out the purposes of the meeting, and ideas to build upon a long standing relationship for both parties, all instigated by the broker and welcomed by the owning company personnel.
The face to face was successful. And, the brokers’ prior efforts to establish credit lines and put his owner in the best light with the supplier were rewarding for the owner and the request for the supplier to travel thousands of miles also rewarding for the supplier. Yet, after the meeting the buyer secretly communicated with the supplier and they agreed to cut out the broker.
Customer’s said it’s not their fault because the supplier approached them. And the suppliers claim it’s not their fault because the customer approached them. For sure, the standard is that it’s ultimately the customer’s choice. These excuses can not be acceptable because the meeting took place under gentlemen’s agreement that it would be the broker who would handle all always.
Why would a professional reputable broker give up valuable time to connect worthwhile customers with reputable vendors? Do volatile fragile markets have room for misuse and mistrust?
There are possible solutions to avoid this bad business of bypassing. If the broker’s client communicates directly with the supplier, then supplier can make it standard practice to offer the price via the broker explaining to the new customer that they honor the broker’s introduction and the existing business relationship by offering the same price to both, hence there is no cost burden and in fact added value of a broker’s service. But, it would be wiser if an owners pauses to give thought to the action he is about to undertake and ask not only if it is the moral thing to do, but what is truly achieved by bypassing his point of contact and/or facilitator.
On a positive note, the suppliers who honor the channels that bring them business, and maintain the relationships via the broker contribute to a healthier business atmosphere. They help by stopping the disorder that is currently going on in the market.
However, the suppliers who do not keep to ethical standards and are offer deals to everyone in a hit or miss style – just leaving it to chance who will bring them the business, even competing against themselves, create the confusion and disharmony.
Encouraging values and worthwhile common sense business practices that maintain an order and create harmony will instigate more successful deals. This is what we all should be teaching the younger generation workforce. By first understanding that there is no other way but to be ethical and then knowing the valuable role of a broker and the differences from a trader and supplier, showing more respect to the work of our colleagues would all help the bunker market operate more smoothly and this will have positive reprecussions on the shipping industry as well which could use some cleaning up too.
The International Bunker Industry Association (IBIA) is currently undertaking a beautiful project that will reinvent or re-establish the ethical practices of business basics into the bunker industry.
We are trying to bring back respect and honor to the bunker business, without these qualities the industry has no proper foundation.
A solution I propose is to create bunker brokers contracts or memos of understandings, as a guide for those who engage in using a broker services.
*New York-Athenian, Irene K. Notias, founder and director of Prime Petroleum Services, an organic bunker broker service since 2002, is a long-standing member of IBIA’s ethics, business practices working group. She says that her latest venture BunkersPlus is dedicated to going the extra mile as a bunker buying management service provider of outsourced bunker buying – foolproof and the most cost efficient means to buy one’s bunkers today.