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With shipping markets in the doldrums, Bunker Bulletin caught up with several marine fuel industry credit VIPs and asked them what keeps them up at night. The answer was unanimous: a deep fear of that good-looking, reliable customer going belly-up overnight.

Paul Millar, credit manager for the Bomin Group and an eminence grise of the credit industry, stressed that actually, he really doesn’t lose too much sleep for two main reasons: firstly, Bomin has credit insurance for its customers, and secondly Bomin enjoys full support of the multi-billion dollar M&B group.

This doesn’t mean however that he’s utterly carefree: he’s got his worries. Take the offshore industry: anything that isn’t wind or dredging is of grave concern. Or that bulk player that puts on a brave face, pretending they’re not suffering and probably paying very well, but in reality losing money and bank support – and stepping even closer to the cliff’s edge. His suspicions are especially aroused when a customer he hasn’t seen in some time suddenly comes around asking for credit. He contends that in the marine industry size still does matter, especially to banks. Generally the bigger you are, the less likely you are to fail – but don’t be complacent in thinking this applies to all of the big boys. He also comments on what is in fact an open secret: credit decisions in the bunker market are often made on instinct rather than fact.

Lasse Hojgaard, group credit director at Bunker Holding, says that it’s macroeconomic fundamentals that keep him up at night: an excess supply of vessels with many companies only able to keep their head above water with the help of low bunker prices, with no light at the end of the tunnel in the short term. Several other credit managers preferred to remain anonymous: one says that he too worries about that solid payer who suddenly vanishes. So how to decide who’s really healthy? Look for the source of the company’s cash: is it from ample reserves saved during the good times? Is it from strong bank facilities? Or has the company raised equity via cash injections from ownership?

This manager also worries about bunker traders or resellers: should one default, there would be little recourse for a physical supplier to retrieve money by arresting the ship supplied by the now-bankrupt reseller. That’s because it was the reseller who was the direct counterparty of the ship operator, not the original supplier to the reseller...