Crude Oil Carriers Market

Crude Oil Carriers Market: Snapshot

Crude oil carriers are used in transportation of crude oil from production location to refineries. Pipelines, rail tank cars, tank trucks, and barges are some of the means through crude oil transported. However, crude oil carriers, commonly known as oil tankers, are mainly used in bulk transport from one place to another. Based on vessel type, the global crude oil carriers market is segmented into Suezmax, VLCC/ULCC, Panamax, and Aframax.

The global crude oil carriers market demonstrates high competition levels owing to a range of factors. Presence of many vendors providing alike shipping services and lack of stringent rules in the market are some of the factors making the competitive landscape intense. Besides, availability of freight rates on the Baltic Index is one of the key reasons that intensify this competition.

Diverse Business Strategies by Vendors Driving Market Growth

Key vendors are coming up with new ways to strengthen their position in the global crude oil carriers market. Incorporation of advanced transportation technologies is one such move that is helping major players. Some of them are focusing on utilizing improved carrier models.

Growing crude oil demand from developed and developing countries in pushing the crude oil carriers market. This increased demand can be attributed to need for fuel generation and as a feedstock for chemical production. Swift industrialization in many worldwide economies is one of the key factors projected to push demand for crude oil and its by-products.

As crude oil is explosive nature, following all safety measures during its transport is of high priority. Taking this aspect in to consideration, many ship owners have created appropriate procedures to complete their operation in environmental-friendly manner. All these aspects are supporting for the growth of the global crude oil carriers market. With present increased supply from OPEC countries and low prices of oil, the demand for tankers or carriers is estimated to grow during upcoming period.

Global Crude Oil Carriers Market: Snapshot

Crude oil can be transferred from production spots to refineries by using crude oil carriers. Other means of transporting them are rail tank cars, pipelines, barges, and tank trucks. Crude oil carriers, better known as oil tankers in common parlance, deliver crude oil in bulk from one location to another. Perfect competition prevails at present in the global crude oil carriers market on account of numerous providers of similar shipping services, absence of strict rules, and most importantly information on freight rates on the Baltic Index.

In order to further their positions in the global crude oil carriers market, savvy players are coming up with improved transportation technologies and carrier models. This has served to catalyze growth in the market. Further, ship owners have proper procedures in place to ensure secure and environmentally responsible operations and this is also upping demand in market.

A factor posing a roadblock to the global crude oil carriers market, on the other hand, is the massive initial investment needed to acquire brand new and even second hand carrier ships. This has particularly hampered many aspiring players from foraying into the market.

A report by Transparency Market Research predicts the global market for crude oil carriers to expand at  a tepid CAGR of 3.5% during the period between 2016 and 2024 to become worth US$217 bn by 2023 from US$160 bn in 2015.

VLCC and ULCC Together Account for Dominant Share

The two main kinds of oil carriers are crude oil carriers and product carriers. Crude oil carriers, typically, transfer unrefined crude oil from exploration and production facilities to crude oil refineries. Product carriers, on the other hand, ship refined products to points close to consuming markets. Coastal tank vessel trades are carried out using crude carriers, tank barges, and product tankers. Crude oil carriers serve the West/Alaska coast crude oil trades.

Depending upon the type of vessels, the global crude oil carriers market can be segmented into Suezmax, VLCC/ULCC, Aframax, and Panamax. Of them, the combined share of VLCC and ULCC was about 63.0% in 2015 mainly on account of a significant number of VLCCs operating. In 2015, these two large carriers are said to have transported worth over US$90,000 a day to Asia Pacific. Crude oil carriers are also treated as a medium of floating storage by some energy traders and companies stored wanting to hedge against higher future price.

Aframax held about 21.0% share in the global crude oil carriers market in 2015. Suezmax accounted for nearly 14.0% and Panamax accounted for the rest 2% of the market.    

Powered by China and Japan, Asia Pacific Dominates Market

Depending upon geography again, the global crude oil carriers market can be segmented into Europe, Asia Pacific, North America, and the Rest of the World. Of them, Asia Pacific accounted for share of 41.0% in 2015. This is because, many countries in Asia Pacific, namely South Korea, China, Malaysia, and Japan, own and operate most of the crude oil carriers. Crude oil from West Africa and South America is mainly transported to Asia Pacific, owing to lesser demand from the U.S. which has been witnessing a boom in shale oil and gas and hence requires lesser crude oil.

Europe is another key market for crude oil carriers, in which Greece is said to have owned and operated almost 17.0% of the worldwide crude oil carriers in 2015.     

Improved transportation technologies are driving the growth of the crude oil carriers market

Crude oil carriers, also commonly known as oil tankers are used in transporting crude oil from the production location to refineries. Bargers, pipelines, tank trucks and rail tank cars are some of the means through which crude oil is transported from one place to another. Depending on the geographical aspects, the global crude oil carriers market is widely segmented into North America, Asia Pacific, and Europe. Of them, some countries in the Asia Pacific, have the most demand for crude oil carriers.

Broadly, the crude oil carriers market is divided based on region and vessel type. Back in 2015, two large carriers of VLCC/ULCC were transported to the Asia Pacific, which is attributed to the increasing adoption of crude oil carriers. The medium-sized crude tanker, Aframax, and the largest ship Suezmax have the capacity to transport large number of crude oil barrels. Hence, this will help in transporting more crude oils, from place to place, and increase the demand of the carriers.

The development of crude oil carriers is a key factor spurring the crude oil carriers market. The improved transportation technologies and advancements in carrier models have been served by the industry players to infuse the growth in the market. The product has been witnessing a huge demand to serve the growing need for fuel generation and as a feedstock for chemical production. Additionally, rapid growth in industrialization is another key factor that is surging the need of crude oil carriers. These strategies are pushing the growth of crude oil carriers market in the developed and developing countries.

Geographically, Asia Pacific is at the forefront among other key regions in the crude oil carriers market. Since crude oil is volatile in nature, following safety measures during its transport is particularly important. Considering this aspect, ship owners in this region are following proper processes to ensure environmentally responsible and secure operations. This strengthens crude oil carriers market in the region. In addition to this, presence of some large players reinforces the growth in the crude oil carriers market in this region.