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The Red Sea Challenge for Clean Tanker Exports to Europe

This article examines recent progress and initiatives by the shipping industry to meet new IMO targets and provides Signal Ocean Platform data on emissions developments and trends.

The Signal Group
April 17, 2024

Signal Ocean has conducted an in-depth analysis of clean tanker exports traversing the Red Sea bound for Europe. Building upon our previous insights, this analysis underscores the strategic importance of the Red Sea route in facilitating the transportation of essential clean oil products to European markets, with particular emphasis on the leading contributors and their respective shares in this dynamic maritime landscape.

The visual representation below illustrates the key categories in this context and highlights the significant volumes associated with jet fuel, gasoil and naphtha. Figure 1 vividly illustrates the dominance of diesel, gasoil and jet fuel, which together account for over 70% of clean product shipments transiting the Suez Canal. The share of naphtha in this complex energy landscape is an impressive 18%.

Figure 1: % share of clean tanker products, per cargo group, crossing Suez

Turning our attention to the oil flow dynamics from the beginning of 2022 till today, a noteworthy pattern emerges. A significant portion—around 70%—of jet oil tanker shipments destined for Europe is attributed to key players such as Kuwait, India, and the UAE. (Figure 2) Looking per area the Arabian Gulf absorbs the 50% of shipments with Kuwait taking the first ranking with a 25% share and India with a 15%. 

Figure 2: % share of jet oil shipments, 2022-2024, Origin countries 

This dominance of the United Kingdom in receiving 40% of jet oil shipments from Arabian Gulf (AG) origin countries underscores its significance as a primary destination for such maritime trade. The substantial share suggests a robust trade relationship between the AG region and the United Kingdom, emphasizing the strategic importance of this trade route. In the second position, France's 19% share further contributes to the diverse distribution of jet oil shipments. This highlights the European market's role in receiving significant portions of AG-originating jet oil cargo, with France emerging as a notable player in this trade network. (Figure 3)

Figure 3: % share of jet oil shipments, 2022-2024, Destination countries 

As for alternative origin countries for jet oil shipments to the United Kingdom, two notable contenders that, thus far, haven't demonstrated significant shipment volumes are Korea and the United States. Leveraging Signal Ocean data, our analysis reveals that, in the preceding year, the United States secured a 10% share of clean oil shipments to the United Kingdom, as depicted on the left side. Similarly, shipments from Korea also accounted for a 10% share, as illustrated on the right side. This data sheds light on emerging players in the jet oil trade, hinting at potential diversification of sources for the United Kingdom's oil imports. (Figure 4)

Figure 4: % share of jet oil shipments from the U.S. (left side) and Korea (right side), 2023, Destination countries 

A careful analysis of the monthly volume of jet oil shipments originating from the Arab Gulf states—specifically Saudi Arabia, Kuwait, and the United Arab Emirates—to the United Kingdom unveils noteworthy trends. As of the present moment, the cumulative volume of shipments from the Arabian Gulf to the UK stands at a comparable level to that recorded at the conclusion of December last year (refer to Figure 5). However, the definitive assessment awaits the conclusive results at the end of the month. This determination is crucial in confirming the percentage of interrupted or uninterrupted clean flow shipments heading towards the Mediterranean/UK continent. The forthcoming data will provide a comprehensive understanding of the continuity and potential disruptions in the oil shipment trajectory, shedding light on the overall stability of the supply chain to the designated destinations.

 

Figure 5: Jet oil flows to the United Kingdom, 2023-2024, from the AG

As we delve deeper into the ongoing discussion surrounding potential rerouting scenarios for ships, the recent surge in attacks on vessels in the Red Sea introduces a temporal dimension that complicates the conclusive assessment of outcomes for various types of merchant vessels. Leveraging the capabilities of the Signal Ocean Platform becomes instrumental in this scenario. The platform enables us to actively monitor voyages, allowing for a detailed examination of loading and unloading locations based on vessel size and cargo trade parameters.

We conducted an analysis using jet oil voyages as an illustrative case, focusing on routes from the Arabian Gulf, Far East, India/Pakistan, and the Red Sea to the Mediterranean continent. Specifically, we examined the vessel count for those opting not to traverse the Suez Canal at the beginning of the year. This count was then compared to the number of vessels choosing to follow the regular route, mirroring the quantity of vessels tracked in January 2023 that crossed the Suez Canal.

In the left-side chart depicted below, you can discern the monthly volume of vessels transporting jet oil cargo as they traverse the Suez Canal. This data is juxtaposed against vessels that crossed the Suez Canal during a corresponding period in the previous year, providing a comprehensive view of the changes in shipping patterns. On the right side of the image, the accompanying map visually represents instances where vessels have opted not to cross the Suez Canal since the beginning of the year.

Figure 6: Load areas AG/Far East/India/Pakistan/Red Sea, jet oil cargoes distinguishing those vessels crossing the Suez Canal and those opting not to traverse it

What can be the impact on emissions in case of a deviation? In this last section of our analysis, we have drawn a scenario of a deviation via the Cape of Good Hope impact. 

In the image below, consider the case of a specific vessel (Panamax tanker, 75k dwt, built in 2010, loaded in Kuwait with discharge in Themesport, UK). On the right side, the scenario via the Cape of Good Hope is illustrated, offering a straightforward comparison to the left side of the image depicting the route via the Suez Canal. Notably, the distance in nautical miles (NM) has increased by 70%, with a consequential impact on CO2 emissions measured in kilotons. This example provides insights into the environmental and economic implications of choosing alternative maritime routes.

Figure 7: The Signal Ocean Platform example for a Panamax tanker 75k dwt built 2010, load country Kuwait discharge country UK via Cape of Good Hope vs via Suez

For more in-depth information and access to the Signal Ocean Platform, please don't hesitate to contact us. Stay informed, stay connected.

Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
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Increased Use of Renewable Energy:

Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.

Collaboration and Industry Partnerships:

Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.

To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.

Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.

Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.

Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert

Increased Use of Renewable Energy:

Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.

Collaboration and Industry Partnerships:

Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.

To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.

Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.

Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.

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The Red Sea Challenge for Clean Tanker Exports to Europe

Posted by
The Signal Group
|
January 25, 2024

Signal Ocean has conducted an in-depth analysis of clean tanker exports traversing the Red Sea bound for Europe. Building upon our previous insights, this analysis underscores the strategic importance of the Red Sea route in facilitating the transportation of essential clean oil products to European markets, with particular emphasis on the leading contributors and their respective shares in this dynamic maritime landscape.

The visual representation below illustrates the key categories in this context and highlights the significant volumes associated with jet fuel, gasoil and naphtha. Figure 1 vividly illustrates the dominance of diesel, gasoil and jet fuel, which together account for over 70% of clean product shipments transiting the Suez Canal. The share of naphtha in this complex energy landscape is an impressive 18%.

Figure 1: % share of clean tanker products, per cargo group, crossing Suez

Turning our attention to the oil flow dynamics from the beginning of 2022 till today, a noteworthy pattern emerges. A significant portion—around 70%—of jet oil tanker shipments destined for Europe is attributed to key players such as Kuwait, India, and the UAE. (Figure 2) Looking per area the Arabian Gulf absorbs the 50% of shipments with Kuwait taking the first ranking with a 25% share and India with a 15%. 

Figure 2: % share of jet oil shipments, 2022-2024, Origin countries 

This dominance of the United Kingdom in receiving 40% of jet oil shipments from Arabian Gulf (AG) origin countries underscores its significance as a primary destination for such maritime trade. The substantial share suggests a robust trade relationship between the AG region and the United Kingdom, emphasizing the strategic importance of this trade route. In the second position, France's 19% share further contributes to the diverse distribution of jet oil shipments. This highlights the European market's role in receiving significant portions of AG-originating jet oil cargo, with France emerging as a notable player in this trade network. (Figure 3)

Figure 3: % share of jet oil shipments, 2022-2024, Destination countries 

As for alternative origin countries for jet oil shipments to the United Kingdom, two notable contenders that, thus far, haven't demonstrated significant shipment volumes are Korea and the United States. Leveraging Signal Ocean data, our analysis reveals that, in the preceding year, the United States secured a 10% share of clean oil shipments to the United Kingdom, as depicted on the left side. Similarly, shipments from Korea also accounted for a 10% share, as illustrated on the right side. This data sheds light on emerging players in the jet oil trade, hinting at potential diversification of sources for the United Kingdom's oil imports. (Figure 4)

Figure 4: % share of jet oil shipments from the U.S. (left side) and Korea (right side), 2023, Destination countries 

A careful analysis of the monthly volume of jet oil shipments originating from the Arab Gulf states—specifically Saudi Arabia, Kuwait, and the United Arab Emirates—to the United Kingdom unveils noteworthy trends. As of the present moment, the cumulative volume of shipments from the Arabian Gulf to the UK stands at a comparable level to that recorded at the conclusion of December last year (refer to Figure 5). However, the definitive assessment awaits the conclusive results at the end of the month. This determination is crucial in confirming the percentage of interrupted or uninterrupted clean flow shipments heading towards the Mediterranean/UK continent. The forthcoming data will provide a comprehensive understanding of the continuity and potential disruptions in the oil shipment trajectory, shedding light on the overall stability of the supply chain to the designated destinations.

 

Figure 5: Jet oil flows to the United Kingdom, 2023-2024, from the AG

As we delve deeper into the ongoing discussion surrounding potential rerouting scenarios for ships, the recent surge in attacks on vessels in the Red Sea introduces a temporal dimension that complicates the conclusive assessment of outcomes for various types of merchant vessels. Leveraging the capabilities of the Signal Ocean Platform becomes instrumental in this scenario. The platform enables us to actively monitor voyages, allowing for a detailed examination of loading and unloading locations based on vessel size and cargo trade parameters.

We conducted an analysis using jet oil voyages as an illustrative case, focusing on routes from the Arabian Gulf, Far East, India/Pakistan, and the Red Sea to the Mediterranean continent. Specifically, we examined the vessel count for those opting not to traverse the Suez Canal at the beginning of the year. This count was then compared to the number of vessels choosing to follow the regular route, mirroring the quantity of vessels tracked in January 2023 that crossed the Suez Canal.

In the left-side chart depicted below, you can discern the monthly volume of vessels transporting jet oil cargo as they traverse the Suez Canal. This data is juxtaposed against vessels that crossed the Suez Canal during a corresponding period in the previous year, providing a comprehensive view of the changes in shipping patterns. On the right side of the image, the accompanying map visually represents instances where vessels have opted not to cross the Suez Canal since the beginning of the year.

Figure 6: Load areas AG/Far East/India/Pakistan/Red Sea, jet oil cargoes distinguishing those vessels crossing the Suez Canal and those opting not to traverse it

What can be the impact on emissions in case of a deviation? In this last section of our analysis, we have drawn a scenario of a deviation via the Cape of Good Hope impact. 

In the image below, consider the case of a specific vessel (Panamax tanker, 75k dwt, built in 2010, loaded in Kuwait with discharge in Themesport, UK). On the right side, the scenario via the Cape of Good Hope is illustrated, offering a straightforward comparison to the left side of the image depicting the route via the Suez Canal. Notably, the distance in nautical miles (NM) has increased by 70%, with a consequential impact on CO2 emissions measured in kilotons. This example provides insights into the environmental and economic implications of choosing alternative maritime routes.

Figure 7: The Signal Ocean Platform example for a Panamax tanker 75k dwt built 2010, load country Kuwait discharge country UK via Cape of Good Hope vs via Suez

For more in-depth information and access to the Signal Ocean Platform, please don't hesitate to contact us. Stay informed, stay connected.

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