Over the three years to 2017, declining input costs and an appreciating dollar are forecast to continue pressuring bunker fuel prices down.
Los Angeles, CA (PRWEB) April 16, 2015
Bunker fuel has a buyer power score of 3.9 out of 5, indicating a favorable purchasing environment for buyers. Bunker fuel is an extremely standardized product, and most marine engines are capable of burning all major varieties of the product. “The homogenous nature of the product allows buyers to compare supplier offerings more efficiently and eases the supplier selection process, reducing searching costs for buyers,” says IBISWorld procurement analyst Ian Buchanan.
Furthermore, many ports have strict regulations concerning the composition of bunker fuel used by docking ships, so suppliers are legally required to provide bunker fuel refined to high standards, which increases product standardization among suppliers. In addition, strong growth in crude oil production, a key input cost for suppliers, has helped drive operating costs down for suppliers over the three years to 2014. As a result, suppliers have been able to reduce the price of their bunker fuels, providing relief for buyers. “Over the three years to 2017, crude oil production is forecast to continue rising at a significant rate, exceeding demand levels and causing the world price of crude oil and, thus, suppliers' operating costs, to decrease further,” adds Buchanan. “Consequently, buyers are expected to benefit from further declines in the price of bunker fuel during the next three years.”
However, high market concentration limits the number of supplier options available and, consequently, cuts into buyer power. Unlike the distribution networks of gasoline, propane and other common fossil fuels, the distribution network of bunker fuel is primarily port-centered and remote distribution of bunker fuel is extremely expensive. As such, buyers may face significant switching costs in the event that their current supplier becomes unsatisfactory. Crude oil, an extremely volatile commodity, dominates the cost structure of most suppliers. Because suppliers have low average profit margins, changes in crude oil prices have a direct and sudden effect on prices. Consequently, the price of bunker fuel has been highly volatile from 2011 to 2014, making budgeting difficult for buyers. For more information, visit IBISWorld’s Bunker Fuel procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of bunker fuel, which is also known as bunker crude, marine fuel, fuel oil or residual fuel. Bunker fuel is produced by fractional distillation and distills more slowly than propane, gasoline or jet fuel. As a result, bunker fuel is thicker and heavier than most other fuel types, making it suitable to power large marine engines. This report covers all bunker fuels. This report excludes other types of fuel, such as gasoline, propane and jet fuel.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.