High VLGC Growth Seen As LPG Transportation Increases

The U.S. has been established as the major LPG exporter, which in turn has boosted waterborne LPG exports, mainly to Asia Pacific countries, observes Grand View Research. This trend is expected to continue and establish a key market driver for global demand. The VLGC market is also expected to be driven by developments in the oil and gas capital markets, such as decreased interest rates, a rising income prospective, and an increase in liquidity levels among major investors.

Very large gas carriers have a capacity of about 80,000 cu meters, a huge amount that is helpful in enhancing profitability margins by lowering logistics costs and advantaging economies such as in India, China, Vietnam, and South Korea. Decreased transportation costs are also projected in the future, mainly for trading activities between the U.S. and the Asia Pacific. In addition, comparatively expensive LPG from the Middle East has boosted LPG trading from the U.S. to the Asia Pacific region, resulting in a high market growth forecast.

The transit route for trading products between North America and the Asia Pacific is expected to get larger with the opening of the expanded Panama Canal. Although the expansion is expected to witness high freight rates, the positive factor is it will help decrease overall transportation cost. Finally, more stringent environmental regulations aimed at more polluting fuels is driving the need for cleaner fuel sources such as LPG, thereby increasing global VLGC demand.