The European liquid bulk sector, consisting of tank storage, tanker vessel and barging transport logistics, is dependent on global trade and is therefore influenced by geopolitics. Looking at current developments we conclude that there is a shift from globalization to global competition. The three major economic blocks, the US, China and the EU, are increasingly competing for economic power. In this race the EU is falling behind. The reason for this lag in economic development can be attributed to high energy prices, a strategic dependence on imports of critical raw materials, a poor track record of breeding high value innovative technology companies, and complicated, slow and indecisive decision making processes in the EU Council.

The report on EU competitiveness made by Draghi pinpoints three transformations that are needed to increase competitiveness: accelerate innovation and find new growth engines, bring down high energy prices while continuing to decarbonise, and cope with instable geopolitics by reducing dependencies and increasing defence investments. For Energy Intensive Industries and the transport sectors in Europe the report formulates a number measures along this line. Generally speaking the measures aimed at combatting high energy prices, aimed at supporting the automotive sector and aimed at spurring investments in chemical business and hydrogen are positive for tank storage and liquid bulk transport companies as business in chemical industries is supported. Hopefully these measures will be a priority for the European Commission and the European Council in the months and years to come. Much is at stake: our wealth, independence and way-of-life are under threat!

Short term market fundamentals are less favourable for tank storage and tanker transport markets. Oil prices are less volatile and the market is in backwardation. Natural gas prices are about four times as high compared to US markets leading to high marginal cost levels compared to other major competing regions. Petroleum refining and steam cracking margins are also depressed. The bearish market sentiment has translated into a lot of announced closures in Europe. Refineries and chemical plants across the continent are closing operations in a push to rationalize capacity. The effect on business is negative as this means less transport volumes and thus less need for tank storage capacity and shipping capacity. Our research has already confirmed decreasing tank storage rates and freight rates compared to previous periods. 2025 is set to become a difficult year for the liquid bulk supply chains and logistical operators in Europe.

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