Insight Conversation: Carsten Ladekjær, CEO, Glander International Bunkering

Glander International Bunkering is one of the oldest bunker traders in the world and contributed to the development of the worldscale system used by shipowners and charterers when bidding on a charter. After being acquired by International Bunkering Middle East in 2013, the company's growth accelerated with offices in the US, UAE, India, and Singapore. It also has locations in Montreal, Florida, Spain, Norway and Geneva. Glander CEO Carsten Ladekjær talked to Surabhi Sahu and Claudia Carpenter on the shipping industry's decarbonization goals, the emergence of new fuels in the market, and Glander's expansion plans.

What is your outlook for the upcoming year?

When looking at fiscal 2021/22 comparing with the previous year we remain cautiously optimistic. As global trade picks up in 2021, we expect to see a new "normal" shipping and bunker market.

Does Glander seek to expand in new geographies?

Most recently our office in Montreal became our second location in North America and ninth worldwide, specializing in northern territories like Canada and the US East Coast.

Do you think the shipping industry is doing enough to meet its decarbonization objectives? What are the newer fuels for the future and what are your thoughts on LNG in particular?

There will not be one silver bullet solution to decarbonize our industry, and it will take years. In order to meet the 2030 and 2050 targets set out by IMO, LNG is unlikely to suffice as a standalone solution, and it does not necessarily fit all. LNG is considered by many to be an interim solution and a stepping-stone for some, in lack of more feasible and readily available long-term alternatives. On a longer term, we expect to see a mix of ammonia, methanol and hydrogen among the sustainable solutions but there is still a long way to go before the industry will be ready to make a significant switch.

What are your thoughts on having a carbon credit/offset system to meet decarbonization as well as a proposed International Maritime Research and Development Board fund?

The carbon credit offset system could play its part in such measures but it will not lead to full decarbonization in its own right.

The proposed IMRB fund is quite interesting in my view. It is a new way of financing R&D within the field of decarbonization, and as long as it creates a level playing field for all, I think it could work. The fact that several leading shipowner associations such as BIMCO, Intercargo, Intertanko etc. are behind the proposal also fills me with optimism and hope.

What is your outlook for Singapore's bunker sales this year? Were you surprised with its strong growth performance last year amid COVID-19?

Last year we noticed a demand shift partly caused by COVID-19, and in some cases in favor of larger flow ports such as Singapore. The correlation between these shifts and regional lockdowns was quite remarkable, and that is what surprised me most. This year I believe we might see more demand growth in Singapore and the rest of the world in line with the recovery of the global economy.

What are your plans for the Fujairah bunker market and its growth prospects?

We have always had a strong focus and foothold in the Fujairah bunker market. After seeing a surge in demand during the IMO 2020 transition, the Fujairah bunker market was somewhat negatively affected by regional sanctions, COVID-19, as well as low oil prices caused by lower demand. I am confident that Fujairah is coming back strong, and we shall continue to have strong focus on this market also in order to maintain and develop our valued relationships with both our suppliers and all our customers who are lifting bunkers there.

What are your thoughts on scrubbers?

Right now we see a price spread of around $120/mt in Singapore between HSFO and VLSFO. From an economic point of view this should make scrubbers attractive again. Furthermore, we are seeing that in particular shipping segments, which are currently under pressure, having a scrubber can make the difference between breaking even with current freight rates or not. Whether scrubbers have a long-term future in shipping is a good question. Some scrubber manufacturers argue that with a modular approach, scrubbers may be upgraded over time with the potential to mitigate NOx and PM emissions, and comply with future legislation. There are many factors to consider, and I guess it is fair to say that the long-term future of scrubbers is not yet entirely clear.

Will HSFO demand stay strong worldwide and will that induce even some of the smaller ports to start offering HSFO?

In order to supply HSFO you need to dedicate supply assets, and this means you need to have a certain demand flow. Access to competitive products is also required. If these parameters can be met, you may see some suppliers in smaller ports starting to offer HSFO. Meanwhile, I believe such cases will be the exception from the rule, and that we will continue to see HSFO supply limited to larger flow ports.

The Hin Leong collapse happened last year. This was followed by GP Global and the downfall of some other commodity traders. How has the industry evolved post these episodes and how is credit availability for the industry as a whole?

In the wake of Hin Leong's collapse, new suppliers quickly emerged and others stepped up to fill in the vacuum. As a result the supplier landscape changed rapidly in Singapore with new entrants as well as established players hungry and ready to take their market share. You may argue the same happened in other locations where GP Global used to be a significant player. As a result the credit gap left behind was quickly closed by other market participants.

If we then look at the credit situation in the global bunker market, I feel that in spite of the rising oil prices, it has remained somewhat in balance at least up to now. In my view this can be explained by the following factors: new market participants have stepped in to offer additional credit to customers; existing market participants have increased their appetite to provide credit to some of the healthier large shipping segments; strong freight rates are enabling clients in some large segments to pay on time and hence free up credit for more deliveries with the same supplier or trader and worldwide demand has not fully recovered yet. The big question remains if this will continue, or if we will see the credit situation tighten going forward.