The use of trucks to move small bunkers and gasoline cargoes within the Persian Gulf region has ballooned in recent months as companies look to save time, avoid the risks involved in crossing the Strait of Hormuz and ensure a steady cash flow, several traders and brokers said Sept. 10.

Prior to the war, truck deliveries of oil for blending and domestic supply were done regularly by road in the UAE, Oman, Bahrain and Saudi Arabia, but now volumes have increased manifold, and even bunker fuel for ships is being transported by land routes.

For parcels of 5,000 metric tons or less, they are split into dozens of trucks that then undertake two or three trips from ports such as Ruwais and Hamriyah to Fujairah, the sources said on the sidelines of the APPEC conference in Singapore.

Each round trip costs around 3,300 dirhams ($900) for a 50 mt truck parcel on the Hamriyah-Fujairah road trip, translating into around $18/mt, traders directly involved in this trade said. A voyage for small tankers through the Strait of Hormuz for a small tanker will cost at least four times this amount, they said.

Due to this large difference in transport costs and the risks involved, more than 95% of the small tankers trade on this route has shifted to road, they said. Sea voyages are still being used to transport larger cargoes of 35,000 mt or higher, they said.

The frequency of such deliveries by road has increased because of the geography of the region, with Fujairah, which has massive tank storages, being outside the Strait of Hormuz, while a large part of the UAE is inside the Persian Gulf, a Hamriyah-based oil trader said.

The trader cited an instance in which his company hired 28 trucks for 18 days to move around 5,000 mt of bunkers to Fujairah from Hamriyah.

Due to the highly fragmented nature of the trucking trade, exact numbers were not available, but half a dozen traders said there are hundreds of such instances in the Persian Gulf every week, and thousands of trucks have been deployed because many traders want their cargoes to avoid crossing the Strait of Hormuz, which is expensive, risky and can involve indefinite waiting times that hurt cash flow.

“It is better to send bunkers by land and get payments, rather than wait for the ship to cross outside, with no certainty of it coming back in,” another trader said.

With the increase in land-based traffic, unloading delays are not uncommon, oil brokers and traders said.

The first time “our company hired trucks to move bunkers to Fujairah, it was for a single trip each, and there was a midnight deadline, going beyond which by even a few minutes meant additional cost of a few thousand dirhams per truck, a trader based in Hamriyah Free Trade Zone said.

Now the company hires trucks for several weeks at a stretch, to enable multiple trips back and forth.

“Our company has 20 trucks of its own because it also runs a logistics business, and now they are being used to move bunkers to Fujairah,” another UAE-based trader said.

Source: Platts