Global marine fuel market was valued at US$148.739 billion in 2019 and is expected to grow at a CAGR of 0.84% over the forecast period to reach a total market size of US$156.426 billion in 2025. Marine fuels, also known as bunker fuels, are hydrocarbon-based fuels that are used on board a ship. These fuels are primarily derived from petroleum sources and may also contain hydrocarbons from renewable or synthetic sources.
Booming global seaborne trade volume is the major driver of marine fuel market. According to the International Chamber of Shipping, the global shipping industry is responsible for carrying around 90 per cent of the overall world trade. Shipping as a transportation option is very important for bulk transport of raw materials and import/export of various manufactured items among different countries. Seaborne trade is continuously expanding with adding benefits for consumers across the world through competitive freight costs. Growing efficiency of shipping as a mode of transport and increased economic liberalization offer strong prospects for the further growth of global shipping industry.
The main reason behind the massive growth of marine industry has been the mushrooming growth in world trade volume, with institutional and technological factors also playing an essential role. The liberalization achievements under the GATT (General Agreement on Tariffs and Trade) and its successor the WTO (World Trade Organization) provided a much needed momentum to world trade in the past. China’s economic opening to the world, with its admission to the WTO in 2001, was also very significant for the global trade. The NAFTA (North American Free Trade Agreement) led Mexico’s exports to the United States trebled within six years of its establishment. Advancements in information and communications technology have further reduced the costs of mobility and accessibility by allowing new network connections and production processes such as just-in-time production, outsourcing, and offshoring. As a result, declining transportation costs, increase in ship size, and exploitation of economies of scale has also boosted the growth of the global marine industry.
According to the UNCTAD (United Nations Conference on Trade and Development) statistics, around 80 per cent of global trade is transported by commercial shipping, which includes items such as food, energy and raw materials, and manufactured goods and components. As per UNCTAD data, the global seaborne export volume has risen from 9,513 millions of tons in 2013 to 11,005 millions of tons in 2018, representing an increase of 2.7 per cent during the period. Similarly, the global seaborne import volume has increased from 9,501 millions of tons in 2013 to 11,002 millions of tons in 2018, representing an increase of 2.8 per cent during the period. Developing economies accounted for the largest share of global seaborne trade, both in terms of imports and exports, in 2018. That is, developing economies loaded (exports) 59 per cent and unloaded (imports) 64 per cent of the world total. Asian and Oceanian developing economies together accounted for most of this share.
According to the International Energy Agency, transportation accounts for nearly 25 percent of energy-related carbon dioxide (CO2) emissions out of which shipping, by far, is the lowest emitter in terms of amounts of CO2 emitted per tonne of goods transported per kilometre. This is true for both inland waterways transportation by barges and ocean-going vessels. In 2016, the International Marine Organization (IMO) agreed to limit the sulfur content in all marine fuels to 0.50 percent, effective from the beginning of 2020, with the exception of fuel burned in Sulfur Emission Control Area regions since they are already at lower sulphur limits. This regulation has significantly affected the oil demand across the global marine industry and is projected to trigger a major change in fuel selection. This factor is further boosting the maritime trade volume, thereby driving the global marine fuel market growth.
Increasing number of favorable trade deals being signed among different countries and/or regions is further anticipated to ramp up the maritime trade volume, thus positively impacting the overall growth of the global marine fuel market. For instance, on June 30, 2019, the European Union (EU) and Vietnam signed a free trade deal that involved the elimination of duties on 99 per cent of Vietnam exports to Europe. In November 2019, a consortium of Florida seaports- the Tallahassee-based Florida Ports Council (FPC)- signed an agreement with the Coordination of Ports and Merchant Marine (Coordinadora de Puertos) of Mexico to promote international trade and economic development. In December 2019, India and Oman signed a Maritime Transport Agreement which is projected to enable India to expand its footprints in the western Indian Ocean, the Persian Gulf, and east Africa. The European Council and China has recently signed a bilateral trade agreement in order to protect the intellectual property of products which are of a specific geographic origin. The deal between the two mega markets protects the rights of 100 EU food products in the Chinese market (including wine and cheese) and 100 China-related products in Europe.
Marine gasoil segment projected to grow at a substantial rate
By type, the global marine fuel market has been segmented as fuel oil and gasoil. Marine gasoil market is projected to witness a noteworthy CAGR during the forecast period. This growth is majorly attributed to the fact that gasoil is the next-best source of low-sulfur fuel for shippers. As such, the demand for gasoil is expected to surge in the coming years as most shippers are likely to use gasoil to adhere to IMO requirements. Marine gasoil can be used for ship engines with minimal operational change and no significant capital investment or time out of service. In conjunction to this, the sulphur content can be controlled in the marine gasoil, since it is a diesel-range material, through the same hydroprocessing method which is used to make low-sulfur diesel. However, high cost of marine gasoil will significantly raise fuel costs for suppliers as diesel-range material is far more valuable than resid.
General Cargo shipment continues to rise
By end user, the global marine fuel market has been classified as oil tanker, gas tanker, chemical tanker, general cargo, and others. General cargo held the substantial market share in 2019 and is poised to grow at a decent compound annual growth rate between 2020 and 2025. According to the UNCTAD data, in 2018, 7.5 billion tonnes were classified as dry cargo out of the 11 billion tonnes shipped internationally. Crude oil, the most important transported good in the 1970s, however, is losing its share since the last four decades, accounting for less than one fifth of the goods delivered by sea in 2018.
Asia Pacific accounted for the significant share in the global market
Geographically, the global marine fuel market has been segmented as North America, South America, Europe, Middle East and Africa, and Asia Pacific. According to the UNCTAD statistics, Asia was the largest trading region in 2018, with 4.5 billion tonnes of goods loaded (exports) and 6.7 billion tonnes unloaded (imports) in Asian seaports. On the other hand, the other continents registered less than half of these figures.
Global marine industry being hit hard by COVID-19 pandemic
The rapid spread of coronavirus across the globe has a horrendous impact on the global marine industry, with the slump in demand for goods from China causing a ripple effect on oil tankers and container ships among others. According to the Shanghai International Shipping Institute figures, the capacity utilization within the shipping sector has fell between 20 per cent and 50 per cent at the biggest Chinese ports. Ports have been closed by countries during quarantine period in order to curtail the transmission of this virus among workers. Certain countries have put ban or restricted the entry of marine vessels, thus causing chaos among the marine transportation facilities at the global level. There has been a decline in import and export of goods and products between countries with perishable goods not being transported due to waiting period of 14 days or as prescribed by the competent authorities in each country. This has further declined the demand for cargos. With owners granting the vessels to charters for a definite time period for fixed costs, the COVID-19 has further imposed difficulties on such settlement as the vessels are prohibited from entering certain ports, thus forcing them to be on territorial waters for an extended time period and causing additional costs to parties. Hence, this global pandemic outbreak caused due to COVID-19 is projected to negatively impact the global marine fuel industry in the medium term.
Competitive Insights
Prominent key market players in the global marine fuel market include Shell, Neste, Total, BP, Chevron Corporation, Exxon Mobil Corporation, Gazprom Neft PJSC, Mabanaft GmbH & Co. KG, Lukoil, Uniper SE, Sinopec Fuel Oil, VARO, and Global Partners LP. These companies hold a noteworthy share in the market on account of their good brand image and product offerings. Major players in the global marine fuel market have been covered along with their relative competitive position and strategies. The report also mentions recent deals and investments of different market players over the last two years.
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