INTERVIEW: Bunker company Fratelli Cosulich seeks growth opportunities despite COVID-19 challenges

Singapore — Genoa-based bunker company Fratelli Cosulich is on track to expand its presence in Singapore as it invests to grow both as a physical supplier and as a trader in the world's largest bunkering hub, CEO Timothy Cosulich told S&P Global Platts.

"Singapore is, and will continue to be the most important bunkering hub in the world. As a Group we have invested significantly in Singapore, both in terms of assets, as well as local talent," he said in an interview on Sept. 9, adding that the company will continue to do so in future.

At the moment, Fratelli Cosulich, a family-owned company, owns and operates a modern fleet of seven barges in Singapore, with sizes ranging from 3,800 dwt to 8,000 dwt, all named after female family members, Cosulich said.

"Almost all our barges are currently delivering VLSFO. On two of our barges we have even installed two MFMs [mass flow meters] in order to allow them to supply two different types of products," Cosulich said.

While the Group will continue to focus on its core businesses, it is also looking at alternative fuels such as LNG and plans are underway on that side, he said.

LNG as a marine fuel not only tackles sulfur emissions, but compared with existing heavy marine fuel oils, LNG also emits 90% less nitrogen oxide, and through best practices and appropriate technologies minimizes methane leakage, realistically reduces GHG by 10%-20% with a potential for up to 25%, according to industry sources.

"We will also continue to invest in our successful ship-agency, freight-forwarding, catering and yachting businesses," he said, adding that the company had also recently completed the acquisition of a yacht-agency in New Zealand.

The company will continue to expand in other geographies too, Cosulich said.

"The inability to travel, meet people in person and discuss projects has certainly slowed down some of our plans but we remain optimistic for the future," it said.

Tough market environment

The COVID-19 pandemic has had a significant impact on the global economy, including the bunker market, Cosulich said.

Credit availability has also tightened after the collapse of Hin Leong, among Asia's largest oil traders, and operator of a major tanker fleet.

However, the Singapore market has adjusted quite promptly following the exit of Hin Leong and Ocean Bunkering Services, Cosulich said.

Every time a big player in the market goes bankrupt or is the subject of rumors regarding financial fraud, the entire industry is described as an "undesirable" one from a financing point of view, Cosulich said.

"The entry of two new licensed physical suppliers like Trafigura and Minerva was timely and our view is that the market has now re-balanced and we do not notice any shortage of barges or physical suppliers [in Singapore]," Cosulich said.

During the past few months, Fratelli Cosulich, for its part, has adopted an even more prudent approach when it comes to credit management, Cosulich said.

"Our belief is that there are strong, solid and reputable players in the industry: suppliers, traders, and buyers... If we step-up the level of governance and scrutiny we can significantly decrease the likelihood of more exits and market shocks and hopefully we can help banks understand that the industry is a healthy one," he said.

Other challenges

The situation in Singapore has remained largely under control during the past few months and the Maritime and Port Authority of Singapore has handled this challenging period in an efficient and effective way, Cosulich said.

Needless to say, there have been multiple issues that companies had to deal with, particularly with regard to crew changes as seafarers faced serious hardship having to stay onboard much longer than originally planned.

Fortunately, the situation on that front gradually improved, Cosulich said.

On June 25, the MPA said that since March 27, it had approved more than 13,000 cases of crew sign-ons and sign-offs involving some 650 companies and 1150 ships.

Meanwhile Fratelli Cosulich continues to focus its effort on being a "truly customer-centric organization and we have therefore worked hard over the past few months talking to our clients and looking at ways to address their needs in this difficult time," Cosulich added.