The global bunker fuel market is highly competitive. The market is capital intensive for some players, while for others it is not, states a new report by Transparency Market Research (TMR). For instance, companies that act as brokers focus on bunker delivery services and require less capital whereas companies that own physical assets, need significant capital to operate in the market. Companies such as Chemoil Energy Limited and World Fuel Services Corporation offer bunkering services in all major ports of the world. Other companies such as Gazpromneft Marine Bunker LLC and Lukoil-Bunker LLC operate only in certain regions.
Many bunker suppliers are entering into long term agreements with shipping lines to expand their global network, enabling them to serve clients in a strategic manner. A shortage in bunker storage capacity is leading to a gradual trend of consolidation by large suppliers. The threat of substitutes is expected to rise from low to medium owing to rising demand for clean sources of marine fuel.
Dropping Crude Oil Price Benefits Bunker Fuel Market
Bunker fuel is extensively used in the oil and gas industry. The exploration sector is rapidly developing, which is benefitting the global bunker fuel market. The rise in demand for new hydrocarbon reserves is causing a shift of focus from onshore to offshore reserves. Since the demand for bunker fuels is extremely high for offshore support vessels, many bunker supplier companies have shifted to ports that are strategically located near offshore hydrocarbon basins. This is benefitting the global bunker fuel market.
The dropping price of crude oil is another reason behind the growth of the market. Crude oil and product tanker movements have increased greatly in the last few years owing to an increase in the purchase and strategic storage of crude oil. The increasing trade movements owing to a decrease in the crude oil prices have also led to an increased demand for bunker fuel.
Fuel Reduction Initiatives to Impact Demand for Bunker Fuel
Several ship owners and operators have implemented fuel reduction initiatives to limit emissions by shipping liners. The minimum energy efficiency requirements set by the International Maritime Organization (IMO) has enforced the energy efficiency design index, which is expected to be behind the decreasing demand for bunker fuel. This is because ships are specifically being designed to reduce fuel consumption through voyage optimization. The use of hull-form optimization techniques for improving the energy efficiency of ships will further hamper the demand for bunker fuel, states a TMR analyst.
Expansion of ECAs Boosts Demand for Marine Diesel Oil and Marine Gas Oil
LNG fueling technology is expected to be utilized extensively in order to comply with upcoming MARPOL regulations, which impose restrictions on sulfur emissions from marine vessels. LNG bunkering is the only feasible option available, which meets the NOx emission control area and Sulphur emission control area (SECA) requirements. Moreover, the Mediterranean Sea, Gulf of Mexico, Strait of Malacca, and Sea of Japan are expected to be declared as emission control areas (ECAs) in the near future. This will further the demand for marine gas oil (MGO) and marine diesel oil (MDO) grade marine fuels as they comply with environmental regulations. The demand for MDO and MGO grade marine fuel oil will not only rise in the ECAs but also outside the ECAs, owing to strict environmental norms.
According to the report, the global market opportunity in bunker fuel is expected to rise from US$232.72 bn in 2015 to US$292.42 bn by 2020. On the basis of fuel grade, the IFO 380 segment led in the past and is expected to retain its leading position in the coming years. By end use, the bulk and general cargo segment is expected to lead and account for 44.1% of the global bunker fuel market by 2020. By geography, Asia Pacific is expected to lead and account for 39% of the global market by 2020.
This information is based on the findings of a report published by Transparency Market Research titled “Bunker Fuel Market - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2014 - 2020.”
The global bunker fuel market is segmented as follows:
- IFO 380
- IFO 180
- IFO Others
- Container Vessels
- Tankers Vessels
- Bulk & General Cargo Vessels
- Other Vessels
- Major Oil Companies
- Leading Independent Distributors
- Small Independent Distributors
- North America
- Asia Pacific
- Middle East
- Rest of the World (RoW)
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