- Limited Tanker Supply Adds Pressure to Biofuel Trade.
- Freight Bottlenecks Intensify as Biofuels Compete for Tanker Space.
- Regulatory Shifts Reshape Biofuel Shipping Costs and Routes.
The global biofuels market has grown virtually 400% since 2007, from 5mn t/yr to more than 25mn t/yr today. This growth, spurred by changing regulations and the pursuit of cleaner fuels, has broadened the range of feedstocks and cargo types used. But biofuels are still tricky to transport, as the industry depends greatly on the chemical tanker market, already strained from conventional chemical cargoes, reports Clarksons.
Limited Tonnage Availability
Chemical tankers, the main ships used for biofuel transport, are experiencing a tight supply. Geopolitical tensions, regulatory modifications, and a low forward orderbook have all played their role. The diversion of ships through the Cape of Good Hope, skirting the Red Sea, has added to the challenge, tightening availability even more and driving freight rates upward.
Competition for Tanker Space
The lack of a specialised biofuels shipping fleet requires biofuel cargoes to compete head-to-head with conventional chemicals for available space. This competition increases as demand for both industries expands, creating freight bottlenecks and putting more pressure on procurement methods.
Regulatory Pressures and Cost Impacts
Biofuels are a market driven by policy, and regulatory adjustments have immediate effects on shipping logistics. Regulations like the EU’s caps on palm oil-based biofuels, Chinese anti-dumping duties on imports, and U.S. tariffs on biofuel feedstocks have reoriented trade flows. Manufacturers now need to incorporate regulatory agility into their logistics strategies or face severe disruption.
Trade Tensions Fuel Demand Uncertainty
U.S. tariffs can temporarily lower demand on major trade lanes, compelling Chinese-made used cooking oil (UCO) and tallow from Brazil, Australia, and Canada to find alternative markets. Uncertainty regarding the future of the U.S. 45z Regulation also has the potential to impact domestic demand and global supply chain dynamics.
Strategic Freight Solutions for Biofuel Shippers
To overcome such challenges, the producers and sellers of biofuel need to engage in long-term, risk-covered freight strategies. Clarksons’ Specialist Products business provides customised solutions, assisting customers in obtaining firm and competitive transport arrangements. Central services are:
- Long-Term Chartering: Fixing freight prices to eliminate exposure to the volatility of markets
- Market Intelligence: Forecasting freight trends and managing risk
- Innovative Solutions: Reviewing investments within tonnage and establishing strategic collaborations for dedicated supply chains
With biofuel volumes surging and freight markets constricting, the moment to act is now. Constructing robust and adaptable shipping strategies is no longer a choice, it’s a requirement for remaining competitive and maintaining supply chain continuity.
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Source: Clarksons
