The bunker fuel market consists of various heavy fuel oil grades that are used to power ship engines. Bunker fuels play a vital role in lubricating engines, generating power and propelling ships across seas. With nearly 90% of global trade being transported by ships, there is immense demand for bunker fuels from the shipping industry.
The global bunker fuel market is estimated to be valued at US$ 150 billion in 2023 and is expected to exhibit a CAGR of 6.6% over the forecast period 2024-2031, as highlighted in a new report published by Coherent Market Insights.
Market key trends:
According to World Trade Organization, the volume of goods transported by sea is expected to double by 2040. As major shipping companies look to expand their fleet sizes, global demand for bunker fuel is poised to rise substantially over the coming years. Furthermore, International Maritime Organization’s mandate on reducing sulfur content in bunker fuel from January 2020 is prompting shipping companies and fuel suppliers to increase their investments in very low sulfur fuel oil (VLSFO) and liquefied natural gas (LNG). The shifting focus towards cleaner burning marine fuels compliant with emerging emission regulations will further accelerate the demand for bunker fuels like VLSFO and LNG in the foreseeable future.
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Bunker fuel refers to specially refined fuels used to power ships and marine vessels. It is a dense residue from the distillation process of crude oil. The global bunker fuel market is estimated to be valued at US$ 150 billion in 2023 and is expected to exhibit a CAGR of 6.6% over the forecast period 2024-2031.
The opportunity for cost reduction is a major driver for the bunker fuel market. Shipping lines and vessel owners aim to optimize fuel costs, which account for a significant portion of operational expenses. Low-sulfur bunker fuels compliant with stringent emission norms offer the prospect of lowering fuel bills compared to conventional fuels. Transitioning to cleaner alternatives like liquefied natural gas (LNG) also promises cost savings over time due to price stability
Threat of new entrants: The threat of new entrants is moderate as the bunker fuel market requires high capital investments and stringent environmental regulations.
Bargaining power of buyers: The bargaining power of buyers is high as bunker fuel is a commodity product and buyers have a variety of global suppliers to choose from.
Bargaining power of suppliers: The bargaining power of suppliers is moderate as major oil companies dominate the global supply of bunker fuel.
Threat of new substitutes: The threat of new substitutes is high as alternative marine fuels such as LNG are gaining traction to reduce environmental impact.
Competitive rivalry: Competitive rivalry is high amongst major bunker fuel suppliers such as Shell, BP, and ExxonMobil.
Strengths: Bunker fuel is a widely used and established marine fuel. Major oil companies have extensive global supply infrastructure and economies of scale.
Weaknesses: Bunker fuel is environmentally damaging and greenhouse gas emissions from shipping are a concern. Stricter emissions norms will increase compliance costs for suppliers.
Opportunities: Demand for cleaner burning fuels from the shipping industry provides an opportunity for suppliers of alternative fuels like LNG and biofuels. Developing economies in Asia Pacific are driving growth in seaborne trade.
Threats: Tighter sulfur regulations by IMO will reduce bunker fuel demand. Alternative fuels can significantly capture market share if price reaches parity with conventional fuels. Supply security concerns over regional dependence on key bunkering hubs.
The global bunker fuel market is expected to witness steady growth over the forecast period driven by growth in world seaborne trade and cargo volumes.
Regional analysis: Asia Pacific will continue dominating the global bunker fuel market led by China, Korea, Singapore and India. China and India are major cargo loading nations facilitating strong bunkering demand while Korea and Singapore are bunkering hubs. The region accounts for over 50% of global bunker fuel demand and outlook remains positive driven by continued growth in trade and manufacturing.
Key players: Key players operating in the bunker fuel market are Shell, BP, ExxonMobil, TotalEnergies, Chevron and PBF Energy. Shell is one of the largest suppliers with an extensive global network while BP, ExxonMobil and TotalEnergies also have sizable marketing and supply businesses. PBF Energy is a leading North American supplier and marketer of fuels including bunker fuels.
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it