Marine Fuel Market - Global Forecasts from 2022 to 2027

The global marine fuel market was valued at US$113.042 billion in 2020 and is expected to grow at a CAGR of 3.83% over the forecast period to reach a total market size of US$147.016 billion in 2027.

Marine fuels, also known as bunker fuels, are hydrocarbon-based fuels used on board a ship. These fuels are primarily derived from petroleum sources and may also contain hydrocarbons from renewable or synthetic sources.

The booming global seaborne trade volume is the primary driver of the marine fuel market. According to the International Chamber of Shipping, the global shipping industry is responsible for carrying around 90 percent of the overall world trade. Shipping as a transportation option is vital for the bulk transport of raw materials and the import/export of various manufactured items among different countries. Seaborne trade is continuously expanding, benefiting consumers worldwide through competitive freight costs. The growing efficiency of shipping as a mode of transport and increased economic liberalization offer strong prospects for the further growth of the global shipping industry.

The main reason behind the massive growth of the 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 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 highly significant for global trade. The NAFTA (North American Free Trade Agreement) led Mexico’s exports to the United States to treble 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 percent of global trade is transported by commercial shipping, including food, energy, raw materials, and manufactured goods and components. As per UNCTAD data, the global seaborne export volume has risen from 9,513 million tons in 2013 to 11,005 million tons in 2018, representing an increase of 2.7 percent. Similarly, the global seaborne import volume has increased from 9,501 million tons in 2013 to 11,002 million tons in 2018, representing an increase of 2.8 percent. Developing economies accounted for the largest share of global seaborne trade, both in terms of imports and exports, in 2018. Developing economies loaded (exports) 59 percent and unloaded (imports) 64 percent 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, except for fuel burned in Sulfur Emission Control Area regions since they are already at lower sulfur limits. This regulation has significantly affected the oil demand across the global marine industry and is projected to trigger a notable change in fuel selection. This factor is further boosting the maritime trade volume, thereby driving the global marine fuel market growth.

An increasing number of favourable 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 eliminated duties on 99 percent of Vietnam's 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 projected to enable India to expand its footprints in the western Indian Ocean, the Persian Gulf, and East Africa. The European Council and China have recently signed a bilateral trade agreement to protect the intellectual property of products that 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.

The marine gas oil segment projected to grow at a substantial rate

By type, the global marine fuel market has been segmented as fuel oil and gas oil. The marine gas oil market is projected to witness a noteworthy CAGR during the forecast period. This growth is majorly attributed to the fact that gas oil is the next-best source of low-sulfur fuel for shippers. As such, the demand for ga soil 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 with this, the sulfur content can be controlled in the marine gasoil, since it is a diesel-range material, through the same hydroprocessing method used to make low-sulfur diesel. However, the high cost of marine gas oil will significantly raise fuel costs for suppliers as diesel-range material is far more valuable than residual oil.

General Cargo shipment continues to rise

By end-user, the global marine fuel market has been classified as oil tanker, gas tanker, the chemical tanker, general cargo, and others. General cargo held a substantial market share in 2019 and is poised to grow at a decent compound annual growth rate between 2020 and 2025. According to 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 critical transported good in the 1970s, however, has been losing its share over the last four decades, accounting for less than one-fifth of the goods delivered by sea in 2018.

The Asia Pacific accounted for a significant share of the global market

Geographically, the global marine fuel market has been segmented as North America, South America, Europe, the Middle East and Africa, and the 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.

COVID-19 Impact on Marine Fuel Market

The rapid spread of coronavirus across the globe had a horrendous impact on the global marine industry. The slump in demand for goods from China caused a ripple effect on oil tankers and container ships, among others. According to the Shanghai International Shipping Institute figures, capacity utilization within the shipping sector has fallen between 20 percent and 50 percent at the prominent Chinese ports. Ports have been closed by countries during quarantine periods to curtail the transmission of this virus among workers. Certain countries have banned or restricted the entry of marine vessels, thus causing chaos among marine transportation facilities at the global level. There has been a decline in the import and export of goods and products between countries, with perishable goods not being transported due to a waiting period of 14 days or as prescribed by the competent authorities in each country. This has further declined the demand for cargo. With owners granting the vessels to charters for a definite period for fixed costs, 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 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.

Key Developments in the Market

• In January 2022, WasteFuel, a low-carbon biofuels producer, launched WasteFuel Marine, a renewable fuel solution for the maritime industry. WasteFuel Marine's first offering was bio-methanol for container ships. Compared to conventional fuels, WasteFuel claims that its marine fuels would lower CO2 emissions by 95 percent and nitrogen oxide emissions by up to 80 percent.
• In January 2022, ZeroNorth, a technology firm dedicated to accelerating global trade's green transformation, expanded its portfolio with the acquisition of ClearLynx, the industry's largest online platform for the worldwide marine bunker fuel market. The duo will offer ship owners and operators a complete end-to-end solution for optimizing marine fuel, journeys, and vessels for environmental and commercial reasons through the acquisition.
• In May 2022, Neste piloted a new Neste MarineTM 0.1 Co-processed marine fuel in Scandinavia with its partner Nordic Marine Oil to develop a solution that can assist the maritime sector cut greenhouse gas (GHG) emissions. Compared to fossil fuels, the ISCC PLUS certified* marine fuel reduces GHG emissions by up to 80% across the lifecycle while maintaining product quality and performance.
• In May 2022, GoodFuels, a worldwide biofuels pioneer, and ITOCHU Corporation, one of Japan's largest general trade corporations, announced a new collaboration agreement to expand sustainable marine biofuel in the Asia Pacific region, including Japan and Singapore.

Segmentation

By Type

• Fuel Oil
• Gas Oil

By End-User

• Oil Tanker
• Gas Tanker
• Chemical Tanker
• General Cargo

By Geography

• North America
• United States
• Canada
• Mexico
• South America
• Brazil
• Argentina
• Chile
• Peru
• Europe
• Germany
• France
• United Kingdom
• Spain
• Italy
• Middle East and Africa
• Saudi Arabia
• UAE
• Israel
• South Africa
• Asia Pacific
• Japan
• China
• India
• South Korea
• Australia
• Philippines
• Indonesia