Technavio market research analysts forecast the oil and gas logistics market in EMEA 2017-2021 to grow at a CAGR of close to 8% during the forecast period, according to their latest report.
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Technavio has published a new report on the oil and gas logistics market in EMEA from 2017-2021. (Photo: Business Wire)
The market study covers the present scenario and growth prospects of the oil and gas logistics market in EMEA for 2017-2021. The report also lists pipeline, railroad, and tankers and trucks as the three major segments based on types of transportation. In 2016, the pipeline segment accounted for more than 64% of the oil and gas logistics market in EMEA.
"The oil and gas logistics market in EMEA will grow at a rapid pace during the forecast period. The major reason for this is an increase in crude oil production in various regions of Europe, the Middle East, and Africa. Oil companies outsource logistics services to contract logistics service providers because they are more specialized in providing these services. In addition, through outsourcing these services, they can serve their customers more efficiently," says Shakti Jakhar, a lead analyst at Technavio for logistics research.
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Technavio analysts highlight the following three market drivers that are contributing to the growth of the oil and gas logistics market in EMEA:
- Shifting freight from over-the-road to intermodal
- Growing crude oil production in EMEA
- Rise in demand for contract logistics services in oil and gas industry
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Shifting freight from over-the-road to intermodal
Shifting freight from over-the-road to intermodal has led to a cost saving of more than 20%. The infrastructure investments in intermodal facilities, including depots, container yards, and rail terminals, are expected to rise during the forecast period, which will help intermodal become a more attractive option for shippers.
The combination of rail and road for freight transportation is the most used mode of transportation in the intermodal freight transportation market. In this model, the freight is loaded in an intermodal container from the shipper's dock, transported by truck to the closest intermodal rail terminal where it is loaded onto specially designed railroad flatcar, which is then carried by train for long distances.
Growing crude oil production in EMEA
Russia is the largest crude oil producer in Europe, with a production capacity of more than 10.25 million barrels/day, followed by Norway that has a crude oil production capacity of more than 1.6 million barrels/day. In the Middle East, Saudi Arabia is the largest producer of crude oil, with a production capacity of more than 10.05 million barrels/day followed by Iraq, Iran, UAE, Kuwait, Qatar, and Oman. Due to the increase in oil production capacity in various countries throughout EMEA, the demand for oil and gas logistics services will surge during the forecast period.
Rise in demand for contract logistics services in oil and gas industry
Logistics functions are handled in-house, as businesses prefer to exercise control and minimize risk. However, with the business landscape becoming increasingly complex and competitive, customers are shifting their focus toward their core businesses. The managements of various companies are investing all their resources and capital on improving their core businesses, which has increased the demand for third-party logistics service providers.
"The increase in contract logistics services in the oil and gas industry has resulted in optimization of business networks and improved oil and gas supply chain performance. Contract logistics helps to shorten the lead time between order and delivery. Also, information management has become easier and gives a clear picture of costs and transportation status," says Shakti.
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