When Oilmar, a Dubai-based shipping company, started its petroleum products and chemicals trading business in 2020, they immediately decided to use trade credit insurance from Allianz Trade.
Rakesh Sharma, the Oilmar’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 — both critical for a new business. “But the bottom line,” he says, “is that it has helped build growth”.
Oilmar Shipping and Chartering DMCC is an established tanker operator running a fleet serving the Caspian Sea, the Black Sea, Turkish ports, the Mediterranean and European ports. They trade with many of the world’s largest oil companies and refiners.
Having long been a purchaser of fuel for their fleet, they decided in 2020 to diversify into trading fuel too, alongside trading chemicals and petrochemicals. Their trading operations grew quickly: in August 2021, they had four traders in Dubai, one in South Korea and one in Greece.
Oilmar’s trading business is growing by around +10% a month. “Without trade credit insurance, the growth would still have been there. But Allianz Trade has added some percentage on top,” Rakesh says.
Although some of their 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 lowcredit 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. Rakesh 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. Rakesh says that suppliers extended additional credit once they heard Oilmar uses trade credit insurance — again helping build growth.
From his previous business experience, Rakesh 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 they were a quality player in the marketplace, rather than adding its value later and making changes to systems.
Allianz Trade's strong international presence was a major selling point for Oilmar. They already had a global customer base, but expansion meant increasing business in countries such as China, the world’s largest oil importer. The company started with 40 or 50 companies in its footprint – they now have 70.
Oilmar has found Allianz Trade easy to work with, particularly in South Korea and Greece, where it has its satellite operations. “It’s very easy to approach Allianz Trade. And it’s the same thing when they go to do your due diligence with a customer. It’s very, very approachable.”
Allianz Trade's strong brand brings substantial advantages. Rakesh says: “From the supplier’s perspective, they have a bit more faith in us when we say we have Allianz Trade protecting our credit portfolio, and they offer us more credit in turn.” In some cases, just giving a supplier their Allianz Trade 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 Allianz Trade, and they understand what it is.”
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.
Rakesh says a critical factor in the company’s expansion is that they have market trust, despite being a new player. “Once Allianz Trade 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.”
