Bunker Fuel Market Size Was Valued at US$ 26.93 Bn in 2022 - Coherent Market Insights
Global bunker fuel market was valued at US$ 26.93 Billion in 2022 and is expected to register a CAGR of 7.1% over the forecast period (2023–2030), to reach US$ 46.51 Billion by 2030. Bunker fuel is used to power the engines of aircraft and ships, among other things. Because gasoline accounts for the great bulk of the expenses connected with delivering products, firms aim to utilise the least expensive fuel feasible in order to maximise profit margins. In general, bunker fuel is divided into two types: distillates and residual fuel oils. Bunker fuel is a type of fuel oil used in nautical vessels to power their engines. A significant quantity is poured into ship bunkers to keep the engines running.
Driver
- Increasing global trade is propelling the global Bunker Fuel market
In the upcoming years, it is anticipated that global trade volume will increase, especially in developing nations like China and India. This expansion will probably result in higher shipping and bunker fuel demand. For instance, the Panama Canal expansion has increased the number of larger ships transiting the canal, increasing the demand for bunker fuel. For instance, in 2021, CMA CGM S.A., a French container transportation announced, Panama Canal was given an order for ten new LNG vessels, and the company announced the operation of nine new LNG container vessels. Therefore, the growth of the Bunker fuel market revenue is being driven by the rising demand for Bunker fuel in the shipping market.
Market Opportunities
- Implementation of environmental laws is propelling market expansion
The shipping industry is under more scrutiny because of its effects on the environment. In order to reduce emissions from ships, a number of regulations have been put into place, such as the International Maritime Organization's (IMO) sulfur cap regulation. This prompted the creation of cleaner and more effective fuels, like LNG (liquefied natural gas) as a bunker fuel and low-sulfur bunker fuel.
In March 2020, Because of the impact of COVID-19 on local pet coke production in China, the Chinese Ministry of Finance has offered tariff exemptions on pet coke imports from the United States.
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Market Restraints
- It is anticipated that price volatility will restrain market expansion
Because bunker fuel is made from crude oil, the market is prone to changes in the price of that commodity. Due to this volatility, it may be challenging for shipping companies to accurately forecast its bunker fuel costs as well as for suppliers to maintain a consistent supply at a stable price.
- Alternative fuels' emergence might restrain market expansion.
The market for bunker fuel may be threatened by the development of cleaner and more effective fuels like LNG and hydrogen. The use of these fuels could decrease the demand for bunker fuel and have an effect on how profitable the businesses that rely on it are.
Market Trends
- LNG as a Bunker Fuel is Likely to Witness Significant Growth
- The global LNG bunkering market evolved over the past decade, driven by the growth in global LNG usage, clean energy demand, and its ability to reduce greenhouse gas emissions. The order and delivery of LNG-powered vessels are increasing, and the reduced natural gas prices in 2020 marked the beginning of expanding opportunities for such vessels.
- The conversion of the current operating vessels into LNG-based vessels is highly expensive. Hence, it is not economically viable. However, the operational cost of LNG-based vessels is expected to be least among all the fuel alternatives, once the new emission regulations become applicable. Further, a gradual shift to LNG for propulsion is more advantageous, as compared to the traditional methods of fueling ships with heavy fuel oil, marine gas oil, marine diesel oil, etc. LNG-based propulsion reduces carbon footprint significantly and increases the ship’s operational efficiency.
- The shipping industry’s commitment to use LNG as a marine fuel continues to grow. As of may 2020, according to the SEA-LNG, operational LNG vessels witnessed an astounding growth from 10 LNG operational vessels in 2010 to 175 in 2020. 2021 marked the growth of deep-sea vessel orders, with more than a dozen operators announcing multi-vessel orders. For instance, in 2021, CMA CGM S.A., a French container transportation business, announced the launch of nine new LNG container vessels and the purchase of 10 more LNG vessels from Hyundai Heavy Industries.
- The LNG bunkering industry also registered significant investments in infrastructure construction, and as of January 2022, there are 33 LNG bunkering vessels and 141 LNG ports operational, and further 170 LNG ports to be expected to be operational by the end of 2022. As a result, the ship owners, particularly the ones that are operating in the European or American Sea, now prefer LNG-based vessels over conventional vessels. Furthermore, the LNG fueled ships have not penetrated the market for bulk carriers to a significant extent, as these ships are designed to carry heavy loads, and LNG technology is relatively new to apply for this type of vessels. The bulk carriers amount to the largest share of the in-operation ships.
- The LNG demand is likely to increase significantly in the forecast period as the order book for LNG vessels continues to increase, relatively cheaper than conventional fuels, offers 23% cut in greenhouse gas emissions over oil-based marine fuel which will aid to meet the global decarbonization goals making it the most popular marine fuel in the future.
Key Takeaways of the Global Bunker Fuel Market:
On the basis of vessel type, the bulk & general cargo segment has accounted the largest market share of 43.30%in terms of value, followed by tankers and container ships segment respectively.
Asia Pacific marked the highest market share in the bunker fuel market in 2022 in terms of revenue and is anticipated to maintain its dominance throughout the forecast period. This is attributed to various factors, including increase in presence of big customer base and rise in maritime trade activities. Moreover, presence of emerging countries, such as China, Japan, and India also contribute towards the growth of bunker fuel market in Asia Pacific region.
New product launches, merger & acquisitions, strategic partnership expansion, and research & development activities for the bunker fuel are key strategies adopted by players in the global bunker fuel.
Global Bunker Fuel Market- Impact of Coronavirus (Covid-19) Pandemic
Following COVID-19, an examination of commodities prices, the shipping sector, and the impact of bunker fuel costs. Use approaches based on fractional integration, fractional integration VAR (FCVAR), and wavelet analysis to do this. From October 2011 through September 2021, monthly data on heavy fuel oil prices and the shipping industry are utilised. Using fractional integration in the post-break period, no mean reversion is shown in any instance, implying that a shift in trend for commodities prices and shipping market indices will be permanent after COVID-19 unless the government take substantial actions.. Using wavelet analysis, conclude that the demand shock represented in the indices mentioned above has led the price of fuel oil since the beginning of the pandemic, and bunker fuel is not relevant in determining the cost of maritime transport.
