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Lloyds List: Loh takes Shell Marine to new highs

Six months in as the head of Shell Marine Products, Loh Wai Kiew is taking the oil major’s bunkers and lubricants business right into the centre of the industry’s biggest market, writes Martyn Wingrove
Jun 13, 2006

 
SHELL Marine Products is facing a radical shake-up this year thanks to its new chief executive and vice-president Loh Wai Kiew, who wants to drive the business into the centre of the booming Asian shipping markets.

The group’s marine fuels and lubricants division will be moving to Singapore by the end of this year in a bid to reposition management closer to their all-important Asian clients.

With the Chinese and Indian economies in overdrive, maritime markets, particularly fuels, offer rich pickings.

Shell Marine’s move to Singapore will place it right in the heart of the region at a logistics hub for the growing number of Asian shipowners.

But the overhaul is not only physical. This year Shell Marine will launch a repackaged services business, now rebranded as ‘journey management activities’.

More than just a marketing strategy, this will be set up to help shipowners optimise their fuel and lubricant requirements along a certain journey and so remain competitive in strengthening shipping markets.

‘There has been huge growth in Far East operations and only modest growth in existing ship movements in the West,’ says Ms Loh. ‘Shipyards are full to capacity, building better and bigger ships.

‘All this will continue for another five years. The United Nations forecasts global growth in trade with 570 new berths in five years, half of these in Asia.’

Shell Marine will build its business to meet the needs of strengthening markets and continue providing long-term contracts for fuels and lubricants, but its total services should go further.

‘There is the need to provide good supply security and shipowners are coming back to the oil majors for this,’ says Ms Loh.

‘Supply security is most important for customers of fuels and lubricants. For fuels it is more important in a price-driven market.

‘But as an industry we need to help shipowners and equipment manufacturers optimise engine efficiency and improve fuel and lubricant runs.’

Shell Marine already operates from 730 ports in 90 countries, supplying 15.000 vessels of all sizes from small fishing boats to very large crude carriers.

It provides 20 different types of marine fuel to power diesel engines, steam and gas turbine vessels. It also has 100 different types of lubricants for marine engines.

The ex-president and chief executive of SembCorp Environmental Management has made the leap into the bunkers and lubricants market.

She was drafted in by Shell because the London-listed group was looking for a new dynamic leader from outside the business, unusual for the normally conservative company.

The Anglo-Dutch oil group wanted to re-evaluate its marine products business to find out how it could reposition itself to meet customer needs as the centre of shipping gravity moves closer to Singapore and China.

Ms Loh’s experience in orchestrating a logistics business that provided environmental and engineering services in 17 cities across Asia was just what Shell Marine needed to crack open the thriving Asian shipping markets.

Under her leadership Shell Marine’s services are being expanded to continue providing rapid bunker and lubricant support around the world, but particularly in Asia.

The service programme aims at improving supply security and guaranteeing quality assurance to clients in long-term contracts and offer deliveries in all ports, especially in Asia.

‘We will offer technical services, e-enabling technology and good supply chain management as supply security is key,’ says Ms Loh.

‘We must have clear executable services that keep clients competitive in all shipping segments, although the ferry and fishing sectors remain tough segments in this high fuel costs market.’

To do this Shell Marine has taken on more roles than just product suppliers as it looks to provide the engineering required to keep their fuels burning efficiently and their lubricants providing the right characteristics for ship engines.

‘We try to go beyond fuel supply to improve efficiency of thermal quality and optimise client’s fuel runs to provide better quality of product to drive those extra nautical miles,’ Ms Loh tells Lloyd’s List.

‘We are addressing the facilities to supply fuels so there are no hiccups at ports. Our combined suite of fuels and lubricant will continue to be the ‘Elixir’ range that makes engines more youthful and help clients lift less over two or more years.’

It appears Shell Marine’s efforts are being rewarded with new business. More shipowners have entered long-term contracts with the oil major to ensure fuel and lubricants supplies are available.

So far this year it has seen an increase in the number of companies entering contracts to take advantage of the growth in fuel availability in a market that is tightening every day.

One big issue for the bunker industry is the demand for low sulphur fuels in the Baltic and North Sea due to the introduction of International Maritime Organization and European Union regulations.

From May 19 the first Seca zone was introduced with shipowners having to comply by reducing emissions and using low sulphur fuels within the Baltic Sea area.

Next year this is to be expanded into the North Sea and English Channel.

Ms Loh is confident the industry will be able to supply enough marine fuels with sulphur levels of 1.5% or lower to meet demand in northern Europe.

‘We are ready and most bunker suppliers are ready,’ she says. ‘All the Baltic ports have 1.5% sulphur fuels at competitive prices.’

It seems many shipowners are looking to take on board 500 centistoke fuels instead of 380 cSt to benefit from more competitive prices.

An increasing number of modern engines are able to switch between these different fuels.

Another challenge for Shell Marine has been getting supplies of lubricants to customers when availability of additives has been very tight.

‘For lubricants the market has been short on additives but we are coming out of the woods,’ says Ms Loh.

‘In the medium term we will meet all the demand of our existing clients and in the long term there will be an easing of supplies.

‘Even with the current supply constraints we aim to meet 98% of demand on time and on schedule, although this is challenging in outlying ports.’

Her division is pushing ahead with investments to meet growing markets and provide services in new Asian ports, but has cut back in other markets such as US marine fuels.

Shell Marine is pulling out of the fuels market on the east and west coasts of the US and Canada, although it continues to deliver marine lubricants in the main ports.

It has stayed in the US Gulf coast markets for both fuels and lubricants as one of the region’s leading suppliers.

‘Strategically we do best in lubricants in the US and in the marine fuels market in the Gulf of Mexico,’ says Ms Loh.

Shell Marine will be investing in new Singapore offices, in people and in double-hulled tonnage to keep ahead of the industry.

‘A key global policy is our investment in double-hulled barges,’ Ms Loh says. ‘By 2010 we hope all our barges will be double-hulled although some ports need more influence to legislate policy for all suppliers.’

With Asian shipping markets flying high, Shell Marine’s move to Singapore should be beneficial and provide the key to opening up more of the Asian market for all its global clients.

‘The biggest growth in new ports is in the east,’ Ms Loh says.

‘We will be moving to Singapore by the end of this year. Everyone needs to be in Asia.’

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