Shipping Marin Oil

The Impact of the recession on marine engine oil suppliers

An interesting and timely article was published in late July in LUBE REPORT,  titled Marine Lubes Feel Shippers’ Pain. The article focused on the impact of the recession on the global marine shipping industry and how it is negatively impacting suppliers of marine lubricants.

The global recession has been particularly hard on the water shipping and transportation industry as consumers in the United States for example have reacted by halting spending which in turn sent shock waves throughout the supply chain, ultimately shutting down factories in China and forcing ship owners to anchor empty ships in ports and harbors wherever they can. For those that are fortunate to have cargoes to transport, ship owners are forced to drastically reduce shipping rates to levels not seen in quite some time. Reduced shipping rates have a ripple effect throughout the organization with owners scrutinizing all operating costs, with marine lubricants in the crosshairs.

The article quoted Caroline Huot, CEO and managing director of Gulf Oil Marine Ltd., a Singapore-based marine lubricant supplier as saying that, “most ships are losing money today and marine lubricants are often the first negotiable item in a ship owner’s budget. Marine lubes are not a commodity but cost is the big focus of ship procurement.” This assessment supports key findings from Kline’s recently completed Global Marine Engine Oil Suppliers: Customer Value Added study. Using a proprietary model to measure importance, the study revealed that customers’ perceptions of price and the multiple drivers of price, has an impact weight of 53% driving their overall value proposition, while product and service quality contributes 47%. Product and service quality is comprised of such drivers as marine engine oil product quality, product delivery, sales representative, and technical service and support, and the multiple drivers of each.

We recognize that our analysis represents a snapshot in time and could be influenced by external factors, market conditions, and other drivers. Given the global economic recession and its much publicized negative impact on the global shipping industry, it is reasonable to assume that pricing could be more important today than when the industry was operating at maximum capacity, just a few short years ago.

The study is based on 300 interviews with global shipping companies about their relationships and opinions of the overall product and service quality of their marine engine oil suppliers. Interviews were conducted in North America, Europe, Asia-Pacific and the Middle East in those countries that support a marine transportation industry such as Japan, Hong Kong, the United States, and Greece among many others. They took place in the second quarter of 2009 with analysis immediately following and the report published by the end of June. For more information about the study, please click here.

We can also arrange for a webinar presentation of the study for your company or organization, please contact George Morvey directly at 973-435-3378 or george.morvey@klinegroup.com

George Morvey
Project Manager, Petroleum and Energy

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