Container Market Consolidation Means Bunker Market Contraction, Tolson Warns

20|20 Marine Energy's Adrian Tolson says container shipping industry consolidation will dampen bunker demand growth.

Continued consolidation within the container shipping markets is setting the tone for a tough 2017 in the bunker markets, Adrian Tolson, Senior Partner at 20|20 Marine Energy warned Tuesday.

"The merger of the liner services of the big three Japanese container lines – NYK, Mitsui-OSK and K-Line – is yet another step in the continued consolidation of the container industry. After mergers, acquisition and bankruptcy the 20 largest container carriers in 2015 are now reduced to just 14 names, and there are rumors that Zim is now looking to turn itself into a regional Mediterranean carrier," said Tolson.

"Consolidation will mean rationalized services, reduced capacity, and fewer and bigger ships."

While this may help improve the financial position of container companies, Tolson says it is unlikely to be good news for the bunker industry, or the world's main bunkering ports.

"Most of the world's biggest bunkering locations and suppliers rely on container shipping to provide volume and consistency of demand. In fact many business plans within the bunkering market depend heavily on selling to this sector of the industry," he explained.

As Tolson has previously told Ship & Bunker, the new 0.50 percent global sulfur cap in 2020 should be a boost for all the big blending centers that are also major ports.

However, this benefit may be short lived.

"With the container sector consolidating, we shouldn't expect to see higher volumes in regions such as Singapore, and Rotterdam," he 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. 2017 promises to be a difficult year for those trying to repeat 2016 sales volumes."