ShippingWatch

OW Bunker delivers 20 percent growth in 2013

OW Bunker, which is close to being sold by its owner - equity fund Altor - maintains its high growth rates: around 20 percent in 2013, just like the previous year, according to ShippingWatch's sourcs. The bunker company will likely be listed.

OW Bunker maintained its growth in 2013, several sources in the market tell ShippingWatch. Last year the company achieved a growth rate of around 20 percent, more or less in line with 2012. The growth of the company - which sells and distributes bunker oil across most of the world - looks set make OW Bunker the biggest bunker company in the world, alongside American World Fuel Services, which also supplies fuel for planes and road transport.

The company is in the process of being sold by its owner of the past seven years, Nordic private equity fund Altor, and OW Bunker CEO Jim Pedersen thus declines to confirm or deny the revelopment in 2013. He only agrees to describe the growth in recent years as satisfactory, and confirms that OW Bunker looks set to steal market shares from its competition.

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Oil companies withdrawing

He also tells ShippingWatch that the market for distribution is growing because many of the big oil companies such as Shell and Statoil in recent years have focused their efforts on the exploration and extraction of oil and gas, and have thus withdrawn from the direct distribution stage servicing end users, bot in terms of cars at gas stations as well as carriers in ports. This development has created more room for large, independent distributors such as OW Bunker, which is in global competition with Singapore-based Chemoil, the two New York-based companies World Fuel Services and Aegean, along with Danish Bunker Holding.

"We've achieved a solid growth in recent years, and we'll continue to grow going forward, though probably not on the same scale. I think we're seeing a growth that surpasses the market because we're now feeling the effects of the structure we've established throughout the years, with a worldwide network of physical distributors. As opposed to many other companies, our network includes both sales and physical distribution," says Jim Pedersen.

Consolidation continues

OW Bunker's own numbers show that the five major independent distributors occupy an increasingly bigger share of the bunker market. This is partly a result of the big oil companies withdrawing from the field, and partly because smaller distributors are losing business in the market. In the third quarter 2013 the five major companies had a combined market share of 34 percent, compared to around 21 percent in 2009. During this same period the oil companies' market share has declined from some 29 percent down to around 23 percent, and the total share of the smaller companies decreased from 50 to around 43 percent. And Jim Pedersen is confident that this development will continue:

"I think we'll see an increased consolidation in the market, either through acquisitions or by the major companies growing organically," says Jim Pedersen.Do you want to stay up to date on the latest developments in International shipping? Subscribe to our newsletter – the first 40 days are free

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And as opposed to the carriers, the bunker companies are not complaining about the growth of the global fleet. When there are too many ships, the carriers start talking about overcapacity, but from Jim Pedersen's perspective, a large fleet equals many customers, and thus only serves as a positive factor in terms of the company's results.

"The growth we anticipate is also a result of the fact that more ships will join the fleet," he says.

The number of customers increased by approx. ten percent between 2012 and 2013, to currently around 2,900. The new markets and new customers will be found in especially Asia and the United States, where OW Bunker has offices in Stamford and Houston, and where the company is currently working to recruit more personnel.

Betting on organic growth

The bunker giant has relied on organic growth to reach its current stature in just a few years. Most recently in Colombia and the United States, but also in Singapore, where OW Bunker is now competing with, among others, local company Chemoil. Establishing both sales and distribution has served as OW Bunker's mantra. Several companies in the market operate solely with sales, in order to keep expenses down. And it is OW Bunker's organic growth that will ensure that this growth continues, on the company's existing markets for now.

"Asia and the United States are important to us. Asia currently accounts for one third of our. Africa, on the other hand, is difficult to approach. The risks are too big, both in terms of crew and investments. The market needs to mature more before we enter it," says Jim Pedersen.

OW Bunker currently has one single African contract.

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