OW Bunker: Panama Canal Widening to Drive Changes in North America

OW Bunker, one of the world’s largest suppliers and traders of marine fuels and lubricants, announced that the North American bunker market faces significant regional changes and challenges in coming years.

In addition to planned regulatory change, the company believes that the US’s impending energy independence, as well as the widening of the Panama Canal, and its impact on infrastructural improvements in US East Coast ports, will serve to significantly alter the dynamics of the regional bunker market.

“Over the next few years we will see shifting dynamics in North America, in addition to other global economic and regulatory influences, which we already anticipate will impact the bunkering market,” said Adrian Tolson, General Manager, OW Bunker North America.

“Naturally the impending 2015 ECA sulphur limit regulation will create significant supply challenges for customers, as well as an increase in their operating expenses with the use of more distillates. In conjunction with this, the increase in US shale oil reserves, which is likely to create energy independence in the region by 2020, will act as a catalyst for a decline in fuel oil production along the US Gulf Coast, due to the lighter nature of shale crudes.”

Mr Tolson believes that the widening of the Panama Canal will also drive change in North America: “While many assume that the developments in Panama will see a major increase in local bunker consumption, there are still a considerable amount of unknowns, particularly as the widening of the canal will see fewer transits. This could impact the volume of canal bunkering, a significant amount of which is draft-dependent, as well as time-dependent.”

“Similarly, North American East Coast ports are being dredged, and new berths being built to accommodate the larger container vessels, mostly from Asia, that will soon transit the Panama Canal. This could see a reduction in bunker activity in Panama and a subsequent increase in East Coast ports. As well as this, the expansion of these all water routes to the East Coast will reduce land and rail transshipment across the country, potentially impacting cargo activity in the ports of the US West Coast. It is a dynamically shifting market.”

Tolson concludes: “However, we firmly believe that with this change, there are also significant opportunities. Our focus is on ensuring our North American business is well positioned to respond to these new dynamics, and to work in collaboration with our customers to ensure that their operations are as efficient and profitable as possible.”

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Press Release, August 26, 2013