The Japan LNG bunkering market is expected to grow at a CAGR of more than 5.25% over the period of 2020 - 2025. The increasing number of vessels using LNG owing to the need for cleaner fuels in compliance with the stringent government regulations in order to reduce air pollution and maintain sustainability is one of the major drivers that is boosting the growth of the market. However, the demand-supply gap among LNG bunkers and vessels is expected to hinder the growth of the market.
- Tanker Fleet segment is expected to dominate the Japan LNG bunkering market during the forecast period.
- LNG is a potential substitute for conventional marine fuel according to IMO emission prerequisites, owing to its negligible sulfur content and low production of NOx contrary to fuel oil and marine diesel oil. Therefore, a shift towards LNG as fuel is expected to create an opportunity for the LNG bunkering market.
- The development of LNG bunkering facilities is drives the market during the forecast period.
Key Market Trends
Tanker Fleet to Dominate the Market
- The tanker fleet is used to store or transport gases or liquids in bulk amounts. These are used to store and carry oil, gas, chemicals, and other products, like vegetable oil, fresh water, wine, molasses, etc.
- Currently, tankers use standard fuel oils and diesel for fleets, which according to the regulations of IMO 2020, from 1st January 2020, have to be shifted to low sulfur content fuel or LNG. With the regulations related to sulfur content in fuel, LNG is projected to become a reliant fuel in the coming years for tankers.
- Hence, the increasing number of tanker fleet is expected to drive the demand for LNG fueled fleet, over the forecast period.
Development of LNG Bunkering Facilities to Drive the Market
- Japan has been one of the pioneer countries in the development of LNG bunkering facilities. Increasing the number of LNG-propelled vessels significantly requires a network of LNG bunkering facilities.
- Japan has been active in international coordination efforts, for instance, the Japan-Singapore Summit Meeting in 2016 and a Japan-Singapore Joint Study on LNG Bunkering in 2017 shows the country's interest in shifting towards LNG.
- Japan could bring together the relevant world ports for LNG bunkering and facilitate the harmonization of technical standards in LNG bunkering.
- In Japan, natural gas consumption has declined to 108.1 billion cubic meters in 2019 from 124.8 bcm in 2014. However, the increasing demand for natural gas domestically coupled with the consumption in the marine sector is expected to boost the natural gas demand in the country, in turn, driving the demand for LNG bunkering facilities in the coming years.
- In January 2018, four of Japan’s largest carrier services providers (K Line, Toyota Tsusho Corporation, NYK Line, and Chubu Electric Power Co.) formed a joint venture, viz., Central LNG Shipping Japan Corporation (CLS) for the development of LNG bunkering facilities in the country.
- In March 2018, three Japanese companies, Uyeno Transtech, Sumitomo Corporation, and Yokohama-Kawasaki International Port Corporation (YKIP) signed a Memorandum of Understanding (MOU) to conduct a joint study on LNG bunkering services for ships based on the ship-to-ship model in Tokyo Bay.
- Hence, such developments are expected to drive the LNG bunkering market in Japan during the forecast period.
The Japan LNG bunkering market is moderately consolidated. Some of the key players in this market include Kawasaki Heavy Industries, Ltd., Central LNG Marine Fuel Japan Corporation, Toyota Tsusho Corp, Mitsui OSK Lines Ltd, and Nippon Yusen Kabushiki Kaisha.
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