When Oilmar, a Dubai-based shipping company, started its petroleum products and chemicals trading business in 2020, it immediately decided to use trade credit insurance from Euler Hermes.
Rakesh Sharma, the company’s head of business, can provide a long list of reasons why, including being able to do more business with each customer and establishing credibility in the eyes of suppliers — critical for a new business. But the bottom line, he says, is that it has helped build growth.
Oilmar’s trading business is growing by around 10% a month. Without credit insurance, he says: “The growth would still have been there. But Euler Hermes has added some percentage on top.”
is an established tanker operator running a fleet serving the Caspian Sea, Black Sea, Turkish ports, the Mediterranean, and European ports. It trades with many of the world’s largest oil companies and refiners.
Having long been a purchaser of fuel for its fleet, in 2020 it decided to diversify into trading fuel too, alongside trading chemicals and petrochemicals. Its trading operations have grown quickly - as of August 2021, it has four traders in Dubai, one in South Korea and one in Greece.
Although some of its business is with multinationals, more than half is with medium-sized companies, with fleets of around 15 to 20 vessels. Most of its customers are asset-backed and would be considered low credit risk.
On the surface, Oilmar could rely on traditional industry mechanisms to protect itself, such as maritime lien (which would allow a customer’s vessel to be seized in the event of non-payment).
But the firm is keen to grow. Mr Sharma explains that trade credit insurance enables the firm to do substantially more business with each customer: “It allows us to double down on the customer, giving reassurance that we are okay and we will be covered.”
Trade credit insurance can also solve a challenge that faces any new market player: achieving credibility with suppliers. Mr Sharma says that suppliers will extend additional credit once they hear Oilmar uses trade credit insurance — again helping build growth.
From his previous business experience, Mr Sharma also knew that trade credit insurance requires a company to have internal processes operating to international standards. He wanted to have these in place from the company’s early days, immediately demonstrating that it was a quality player in the marketplace, rather than adding its value later and making changes to systems.
The Euler Hermes solution
Euler Hermes’ strong international presence was a major selling point for Oilmar. It already has a global customer base, but expansion means increasing business in countries such as China, the world’s largest oil importer. The company started with 40 or 50 companies in its footprint - it now has 70.
Oilmar has found Euler Hermes easy to work with, particularly in South Korea and Greece, where it has its satellite operations. “It’s very easy to approach Euler Hermes. And it’s the same thing when they go to do your due diligence with a customer. It’s very, very approachable.”
Euler Hermes’ strong brand brings substantial advantages. Mr Sharma says: “From the supplier’s perspective, they have a bit more faith in us when we say we have Euler Hermes protecting our credit portfolio, and offer us more credit in turn.” In some cases, just giving a supplier their Euler Hermes ID has been enough to unlock additional credit.
“To be honest, the name is synonymous. Sometimes we don’t even say we have credit insurance; we say we are powered by Euler Hermes, and they understand what it is.”
What’s next for Oilmar?
Oilmar’s trading operation continues to see strong growth. As well as expanding geographically, it is also keen to trade new products such as ammonia, which is likely to replace oil as the shipping industry moves to eliminate carbon emissions.
Mr Sharma says a critical factor in the company’s expansion is that it has market trust, despite being a new player. “Once Euler Hermes was on board with us, and we were on board with them, it got us a lot of faith from the market, which is especially valuable for a growing company. It has added a tremendous amount of value.”