Is the much-heralded "transparency" entering the shipping and commodity markets just a greater volume of "stuff"?
Over time, the nature of our work has changed. When we started Infospectrum 20 years ago (and prior to that, when we started our careers in the age of the dial up modem and fax), a lot of the job was about blending experience and proprietary data, and knowing the right people, in the right place, at the right time. "Factual" or "documentary" information was almost non-existent, and the concept of marketing one's company was limited to keeping your broker informed over a long lunch.
While those precious contacts have been nurtured over the years, the absolute deluge of "information" now available from online sources has made the lives of credit professionals and risk managers massively complex. On a daily basis, credit managers are bombarded with corporate websites, broker's introductions, market reports, gossip and internal feedback, some of which are at best misleading, and others totally (cringe) "Fake News".
It needs time and experience to cut through to the core of the argument and separate "transparency" from "stuff". Time, as we'll discuss in a blog for another day, is a ridiculously precious commodity in shipping and bunkering, with credit managers and traders expected to make rapid decisions, in volatile markets, within time limits predicated by the lifting of subjects or the more intangible "someone else will get the deal". Experience is plentiful, but often shared amongst small teams, often geographically diverse.
Some of the larger groups have developed systems to try and minimise this overload (as have we, you can see more on the ICMS here), but often the pressures of providing a decision in the face of all of this input can lead to excessive caution, or worse, a misleading sense of safety from the "transparency" seemingly offered.
To provide some context, so far this year, we've covered:
- Multiple well-established shipping and bunker trading companies, whose key contractual vehicles have been struck off, some without the management's apparent knowledge (despite many years having passed), and others for reasons completely contrary to that provided by management.
- Counterparties in large-scale S&P transactions where the buying company did not exist, or were compromised from a sanctions/KYC perspective.
- Websites and corporate presentations which have been copied (almost in their entirety) from other, or older, presentations, some of which have been linked to defaulting entities.
- Numerous rumours (some published) of untoward activity in the bunkering market, which needed to be properly assessed, put in context and evaluated.
- The resurfacing of historical defaulting companies under new names (even with management changing their names slightly to avoid obvious links to the predecessor).
- Ship operators and commodity traders dragging out excuses to creditors with ever more imaginative reasons for an inability to pay.
- Major national liner companies making high profile investments in the sector, with these seemingly unsupported by either demand or balance sheet strength.
- The continuing question of IMO2020 preparedness, from the standpoint of suppliers, ship owners and ship operators.
- The impact of market volatility on asset cover covenants, and the increased risk of arrest by banks.
- Highly complex restructurings of insolvent ship owners and bunkering groups, often with the involvement of private equity investors.
- The massive impacts of sanctions compliance and the associated risks of being sanctioned, even for short periods.
Getting to the bottom of all of these issues required an understanding of context, access to the right people and information and the knowledge of how to deliver this resource rapidly. Infospectrum never set out to be the factual gatekeeper of the maritime and commodities world, but despite some efforts, these markets remain far from transparent, and increasingly complex. At risk of adding one more suggestion to the aforementioned deluge, the collective brain (and nose) of almost 50 analysts worldwide can bring a powerful level of assistance to under-pressure risk professionals in our market.
Infospectrum's team has extensive experience in providing pre-contract due diligence and consultancy to the shipping, logistics and commodity trading sectors. If you are interested in discovering how our expertise can support your organisation, click the button below to get in touch.