WEST Indies Petroleum (WIP) Limited, a Jamaica-based integrated energy company, said its WIP Terminal subsidiary is eyeing up opportunities in the bunkering business with forecasts that a strong rebound in cruise ship operations around the region will continue.

Bunkering refers to the process of supplying fuel to ships to power their engines. WIP Terminal wants to supply more of the cruise ships that are expected in the region with fuel from its Jamaica-base.

Cruise lines are seeing a remarkable rebound from declines during the COVID-19 pandemic years, recording 31.7 million passengers last year compared to the 29.7 million cruise passengers in 2019 — the last full year before the COVID-19 pandemic. In 2020 and 2021 when cruise shipping was largely shut down, the industry catered for 5.8 million and 4.8 million passengers, respectively. A year later in 2022, the industry reopened fully and serviced 20.4 million passengers and is expected to welcome 34.7 million passengers this year, according to data from the Cruise Lines International Association, a global cruise industry trade association.

Royal Caribbean, one of the world’s largest cruise operators, recently reported strong indicators of industry growth. The company has seen a 30 per cent rise in repeat bookings over the past year, while also noting that about a third of their current guests are new to cruising. This mix of loyal customers and new entrants suggests a robust and expanding market.

“The cruise industry’s comeback, coupled with its potential for further growth, presents a significant opportunity for our business,” stated Charles Chambers, CEO of WIP Terminal.

“With our strategic location and substantial storage capacity, we’re ideally positioned to meet the growing fuel demands of cruise lines operating in the Caribbean,” he added in a release.

The changing demographics of cruise passengers are likely to impact fuel demand in the region. Royal Caribbean reports that one out of every two guests is now a millennial or younger. This shift towards younger travellers could lead to increased and more varied Caribbean itineraries, potentially driving up demand for marine fuels in the region.

“The interesting thing is the demographic with respect to cruise passengers, in times past cruiser used to be older people, but a lot of younger people seem to be gravitating towards cruises now and I think that for the Caribbean that has to be a good thing,” he told the Jamaica Observer, adding that he expects WIP Terminal to benefit from more cruise ships coming to the region.

“We see opportunities not just in Jamaica, but in other Caribbean countries to expand and we are actually making steps to get there,” Charles pointed out. He said those steps include a general restructuring of the company and completing negotiations aimed at establishing strategic alliances/partnerships to purchase the fuel at cheaper prices, improving efficiencies in physically delivering fuel to ships and signing off on banking relationships to provide credit to the cruise companies that generally buy fuel on credit.

“Overall, it feels tremendously positive and we feel…very good about our future as a bunker company, especially serving the cruise industry.”

WIP started out as a bunkering business in 2013, one year after it was incorporated as a special purpose vehicle to enter the ship bunkering business in the Caribbean and Latin America. However, it has since expanded into the local retail trade and to commercial customers and sell products regionally, sourcing for companies in Government and distributing. The company has grown rapidly in the last 10 years to capture approximately 30 per cent market share of the fuel market that is largely dominated by international brands.

WIP Terminal’s main facility in Old Harbour with its 650,000-barrel storage capacity and its second storage facility in Ocho Rios with a capacity for 100,000 barrels, both have direct access to docking facilities.

“Our location is a key strategic advantage,” Chambers explained. “Being centrally located in Jamaica, with excellent connectivity to major shipping lanes, allows us to offer quick and efficient bunkering services to cruise ships. This is crucial for an industry where time in port is money.”

Still, the resurgence in cruising is not the only issue driving WIP Terminal’s ambition. Charles said the company is also after bunkering opportunities with container/cargo ships which primarily dock in Kingston.

“It comes from a function of three things, cheaper products being made available to us, cheaper and more efficient delivery methods through partnerships on the vessel side of it and a strategic partnership to be able to provide credit to the cruise and container lines which would allow us to sell more.”

“If the price that we sell in the market goes down and vessels that come here now and don’t necessarily buy fuel here because the price in the market is relatively high, they now become our target because of cheaper prices, and we think that vessels that are passing by Jamaica that otherwise would buy fuel in maybe Panama or other destinations, will stop here for what we call bunkering holding calls. So they are not coming to deliver goods or pick up goods or drop off passengers, they just come to take bunkers. In order for all of those things to happen, starting with cheaper products and more efficient ways to deliver it and the credit line to those purchasing,” he added in an interview with the Business Observer.

“As part of our reorganisation and revamping of bunker business, we expect to extend into at least one other Caribbean port shortly,” he said looking forward. WIP Terminals is currently in four ports in Jamaica from which it supplies ships with fuel — Kingston, Montego Bay, Falmouth and Ocho Rios. Asked to give more clarity about which island’s port the company will next set up shop, Charles would only say, “We expect to expand to another territory…early next year.”

Its parent company, West Indies Petroleum Limited, is currently making preparations to list its shares on the Jamaica Stock Exchange as indicated in its 2023 financial statements. It has so far amended its memorandum of association to have shares in the company issued in Jamaican dollars and for the company to be authorised to issue an unlimited number of ordinary shares while previous share certificates issued to its current owners have been returned and cancelled with that followed by 11.16 billion shares in total issued with the majority 79.9 per cent of the shares going to West Indies Petroleum Limited and 20 per cent going to World Energy Solutions Limited. Smaller shareholders were issued the rest.

The company saw its revenues grow 13.3 per cent in 2023 to US$7.57 million but its net profit dipped 24 per cent to US$2.1 million. Growth in the cruise industry now is the focus for growth at WIP Terminal.

To capitalise on this opportunity, WIP Terminal is considering expanding its capabilities. “We’re exploring ways to better cater to the evolving needs of the cruise industry,” Chambers revealed. “Our existing infrastructure and strategic location already give us a strong foundation, and we’re excited about the potential to grow alongside the cruise sector.”