In International Shipping News 16/11/2016
Consolidation in the container shipping industry will hold back growth in bunker demand in the coming years, according to Adrian Tolson, senior partner at consultancy 2020 Marine Energy.
South Korea’s Hanjin Shipping unexpectedly collapsed in August, adding to a series of mergers and vessel sharing agreements in the container market that have reduced its bunker purchases. Container carriers are the biggest purchasers of bunker fuel in the world.
“After mergers, acquisition and bankruptcy the 20 largest container carriers in 2015 are reduced to just 14 names,” Tolson said in a statement late Monday. “Consolidation will mean rationalized services, reduced capacity, and fewer and bigger ships.”
“This may help improve the financial position of container companies, however it is unlikely to be good news for the bunker industry,” he added.
The shipping industry has put bunker demand under pressure in the past few years, seeking to increase fuel efficiency with slow steaming and other measures to offset disappointing freight rates. Annual bunker sales at Rotterdam peaked at 12.2 million mt in 2011, and have dropped by 13% since then to reach 10.6 million mt last year.
Vessel sharing agreements in the container sector have increased fuel efficiency, and the industry has increased its average vessel size and brought in improved hull designs that cut bunker bills.
Tolson said he is working together with marine fuels consultant Robin Meech on a report looking at the availability of bunkers in 2020 after the International Maritime Organization’s new 0.5% global marine sulfur limit comes into effect.
“While the new 0.5% global sulfur cap should be particularly good news for all the big blending centers that are also major ports, in the short term, with the container sector consolidating, we shouldn’t expect to see higher volumes in ports such as Singapore and Rotterdam,” Tolson said. “Demand in major bunker ports is already under pressure and contracting demand will be another challenge for an industry already competing on razor thin margins.”
He added that “2017 promises to be a difficult year for those trying to repeat 2016 sales volumes.”
Source: Platts
