The global LPG tanker market size was estimated at USD 182 million in 2021 and is expected to reach USD 286 million by 2030 at a CAGR of 5% during the forecast period (2022 – 2030).
A liquefied petroleum gas (LPG) tanker is a gas transporter that transports massive volumes of petroleum gases. It is made up of separate reservoirs stacked in cargo holds. Small-pressurized tanks, shielded or refrigerated seagoing tanks, and semi-pressurized tanks are the most regularly used LPG tankers. They are accessible in very big, big, medium, and small sizes and are powered by a manageable propeller and geared diesel system. These tankers also deliver ammonia, propylene, and vinyl chloride. Consequently, they are widely used in a variety of sectors, like oil and gas, petrochemical, automotive, and refinery.
Liquefied petroleum gas is a cleaner fuel compared to coal. Hence a shift toward LPG as a domestic fuel is expected to drive the demand for the transportation of LPG. Concurrently, the need for liquefied petroleum gas for HVAC and cooking applications is on the rise, generating increased demand for transportation and safe storage of liquefied petroleum gas, leading to high demand for LPG tankers in the upcoming years.
|Market Size||USD 286 million by 2030|
|Fastest Growing Market||Asia Pacific|
|Report Coverage||Revenue Forecast, Competitive Landscape, Growth Factors, Environment & Regulatory Landscape and Trends|
The global market for liquefied petroleum gas tankers is projected to witness substantial growth due to the increased trading of liquefied petroleum gas across various countries. Key participants have turned their focus toward oil & gas production from shale rock due to unstable crude oil prices and the improvement of hydraulic fracturing and horizontal drilling processes. As a result, with the transition in focus, the market is expected to grow at a CAGR of 6% over the forecast period, as augmented shale gas production has stimulated LPG trade worldwide.
The opening of a new third set of locks on the Panama Canal in June 2016 is expected to improve LPG trade between the East and West by shortening the distance and shifting international trade routes. Also, the demand for LPG for high ventilation air conditioning (HVAC) and cooking applications has increased. An increase in trade relations between the U.S. and Japan, and India for shale gas from 2020 to 2027 is likely to boost the demand for LPG tankers.
The LPG tanker market is expected to witness high growth owing to a rise in its traditional application for cooking purposes as a substitute for coal and wood. LPG finds application in auto fuel, residential or commercial purposes, refinery, and chemicals owing to its non-toxic, cost-efficient, clean, convenient, accessible, and portable nature. Parameters like the capacity expansion of shale gas from unexplored stocks improved global gas trade, and the ongoing utilization of liquefied petroleum gas as a cooking fuel contribute to the development of the market for liquefied petroleum gas tankers.
CNG is cleaner and cheaper than LPG and mainly consists of methane. LPG has a high calorific value and can catch fire more quickly than CNG. It is used as a substitute for gasoline in automobiles, and it releases a lower amount of greenhouse gasses than LPG. Moreover, it is lighter than air. Hence, it disperses quickly in case of spillage. It is generally cheaper than LPG, and it is widely used in automobiles and locomotives, which is a roadblock to the growth of the LPG tanker market. In the U.S. automotive market, CNG has been introduced in many commercial vehicles, from light-duty trucks to medium and heavy vehicles.
Iran, Argentina, China, Brazil, and Pakistan are some countries that have adopted CNG as a vehicle fuel. Owing to the lower maintenance cost of natural gas vehicles, the growth of the CNG market is expected to have a higher growth trajectory than that of LPG, which is a restraint for the market. The European market is dominated by retrofitted vehicles owing to the increasing adoption of natural gas in buses and trucks, especially in Ukraine and Russia. Factors such as regulatory policies, government subsidies, environmental benefits, availability of resources, and fuel prices are expected to positively influence the adoption of CNG while hindering the growth of the LPG tanker market over the forecast period.
Applications of LPG include residential/commercial, chemical, industrial, auto fuel, and refinery. Other application areas of LPG include refrigerants and agriculture. The consumption of LPG is increasing, particularly in the residential and commercial sectors. This application segment lies in the high growth and high penetration side. In residential & commercial applications, LPG is used for space heating and cooking.
The substantial growth of the oil & gas industry and increasing shale gas production across the world are significant factors contributing to a positive outlook for the market for LPG tanker. LPG tankers are widely used for the safe storage and transportation of LPG over long distances. The growing demand for LPG as a feedstock for the production of fertilizers and petrochemicals is also a leading contributor to market growth.
Numerous technological advancements in LPG tankers, such as the bow wave resistance systems on the tanker's hull and the integration of semi-membrane tanks, are opening new avenues for the market. Due to the latest emission regulations, LPG tanker manufacturers have developed engines with higher efficiency. Other factors such as favorable government policies and extensive infrastructural developments, especially in emerging economies, are expected to drive market growth and create more opportunities.
Based on regions, the LPG tanker market share has been segmented into North America, Central and South America, Europe, Asia Pacific, and the Middle East and Africa.
The European LPG tanker market is expected to witness robust growth as the region is on a significant cusp of technological transformation. The European market for LPG tanker was valued at USD 52 million in 2021. The European market comprises Germany, the UK, Spain, Italy, France, and Russia. Germany, France, and the UK have been identified as significant contributors to the growth of the LPG tanker market in the region, owing to the large consumer base and rising number of manufacturers & suppliers of LPG and LPG tankers.
The European Union (EU) has taken several initiatives to support the energy sector's growth. The market for LPG tanker is expanding through mergers and acquisitions by mainstay industry players and through the establishment of start-ups. Various governments in Europe are strongly pushing for a change in their energy ecosystems by adopting advanced and effective technologies, which is expected to propel the growth of LPG tankers in the region.
Asia-Pacific accounted for the second-largest share of 27% in the global market for LPG tanker and was valued at USD 49 million in 2021. China, Japan, and India lead the market in this region. More than 70% of the LPG tankers worldwide are generated in the Asia-Pacific region, particularly South Korea and Japan. The economies in the Asia-Pacific region are mainly developing countries undergoing rapid industrialization. The demand for LPG tankers is expected to increase as the need for LPG expands from residential to industrial and transportation uses. The high growth rate of industries across China, Japan, and India has driven the demand for LPG tankers.
There are no large gas pipelines in the Asia-Pacific region similar to those in Europe. Instead, the Asia-Pacific region countries rely on importing LPG via ship route from governments worldwide to meet their demand. As transportation by sea route is much more accessible in this region, this is expected to foster the demand for LPG tankers during the forecast period.
The global LPG tanker market share is segmented by vessel, refrigeration and pressurization, and region.
Based on the vessel, the liquified petroleum gas (LPG) tanker market has been segmented into very large gas carriers, large gas carriers, medium gas carriers, and small gas carriers.
In terms of revenue, a very large gas carrier segment dominated the global market in 2021, with a share of 29%, and is expected to grow significantly over the forecast period. The global very large gas carrier (VLGC) market was valued at USD 53 million in 2021 and is expected to reach USD 77 million by 2030, growing at a CAGR of 4%. Frequent product launches in the segment are expected to boost market growth. For instance, in October 2019, NYK announced to charter a new VLGC named Lily Promenade for Astomos Energy for the shipping of LPG.
In addition, leading companies in the LPG tanker market are acquiring VLGC tankers to increase their outreach at the global level. For instance, in December 2021, BW LPG India Pvt. Ltd. purchased four VLGC LPG tankers and thus, expanded its fleet to eight ships registered under the Indian flagship. These factors are expected to prosper the segment growth over the forecast period.
Based on refrigeration & pressurization, the market for LPG tanker has been segmented into ethylene (extra refrigerated), full refrigerated, semi refrigerated, and full pressurized.
The full pressurized segment led the market in 2021 and is expected to maintain its dominance over the forecast period. The full pressurized segment of the market for LPG tanker was valued at USD 59 million in 2021. It is projected to reach USD 101 million by 2030, at a CAGR of 6% over the forecast period. Small size ships (less than 4000 m3 of cargo capacity) are usually the full pressure type. Entirely pressurized ships are small, with maximum cargo capabilities of about 4,000m3, and they are used to carry LPG and ammonia primarily.
In addition, the recent launch of fully pressurized LPG carrier sets in the global market is expected to drive market growth. For instance, in February 2020, Japanese shipbuilder Kawasaki Heavy Industries won an order to construct an LPG carrier from Kumiai Navigation. The order book contained two VLGCs at Kawasaki, one Capesize bulk carrier, one Ultramax, and one fully pressurized LPG carrier expected to be delivered in 2020.
The distribution network of the LPG and ancillary industries was majorly affected due to the shutdown of production facilities, especially in the Asia-Pacific. The global manufacturing and energy & power sectors experienced a considerable slowdown due to the COVID-19. Additionally, local and international travel restrictions, quarantine requirements, and lockdowns further delayed shipments of LPG that were being delivered.
LPG manufacturers usually hold a stockpile of LPG, especially for critical times, in case of emergencies or shortages. However, they faced bottlenecks and shortages of LPG owing to limited production in countries severely affected by COVID-19. End-users and service providers faced difficulty in the procurement and supplies of LPG in affected countries.
Disruptions in production also resulted in skyrocketing prices in some parts of the world, albeit for a short duration in 2020. Though most of the world's critical LPG-consuming economies have government-regulated LPG prices, its sudden and acute shortage massively impacted them. However, most governments were quick to correct the LPG prices, avoid its black marketeering, and tackle the illegal profiteering resulting from the high prices of LPG.
The spread of the COVID-19 hindered the growth of the LPG tanker market globally owing to reduced operational costs by end-users, coupled with disruptions in the availability of LPG owing to manufacturing delays and logistic issues.
Moreover, LPG manufacturers have undertaken subsequent steps to provide their services to end-users having long-term contracts with the service providers. Presently, vendors are opting for digital tools and are following social distancing norms. They use protective kits during onsite inspections or while offering repair services; end-users require a case-to-case basis.
The COVID-19 pandemic has caused several disruptions in the fuel industry. However, mobility and economic activities worldwide are anticipated to increase with time. This will surge commercial and industrial demand for renewable fuels, thereby resulting in an enhanced need for LPG from end users to ensure uninterrupted operations of their respective manufacturing plants.