Most industry market players have agreed that the current rock bottom freight rates will probably last all year and possibly into 2026.
LNG freight rate plummeted to $1,500 per day in the Atlantic Basin on 6th February, a 65% drop on the previous week when rates were assessed at $4,000 per day, according to S&P Global Commodity Insights.
As a result, charterers said that the tri-fuel diesel electric (TFDE) type LNGCs had no advantage over their 2-stroke counterparts.
As has been well documented, the surge in newbuildings has led to an LNGC oversupply situation, which has helped to drive rates down.
If a TFDE vessel is accepted for a charter, the owner will incur a loss, as the vessel’s daily opex will exceed the rate agreed.
It was thought that the TFDE rates would not reach zero, as owners wouldn’t charter the vessels out and take a significant hit, as they would be keen to cover their opex.
“I guess they will be negative if 2-strokes are $5,000 per day,” a charterer said talking with Platts, adding….”they have more boil-off, no reliquefaction and gas it not cheap. There is no advantage of TFDEs over 2-strokes.”
Last year, the average Atlantic day rate was $40,689, falling to $15,000 on 31st December, the last day of 2024, assessed by Platts.
Decline continues
Rates have continued to decline since the start of this year, as on 17th January, they were assessed at $15,000 per day, falling by $9,000 per day to $6,000 on the 24th of the month.
Charters have intensified, due to the limited availability of cargoes, particularly i n the East with the result that many charters were unfulfilled.
In addition, fuel and vessel delivery costs are high, so would be buyers should expect a higher price to account for factors, such as reliquefaction.
One shipbroker said: “If you don’t believe that you will secure employment for the vessel, it becomes expensive to fuel the ship.
“There are usually environmental issues and costs associated with burning fuel to keep the ship cool. Overall, you should expect a higher price to maintain the ship’s temperature, manage reliquefaction and address boil-off, “ he said.
The Pacific Basin has also witnessed a significant downturn since the beginning of this year. Platts assessed LNGC rates at $6,000 per day on 6th February of those operating in the Asia/Pacific region.
As for 2-stroke LNGCs, rates were assessed at $4,500 per day, a $3,000 drop on the previous week, while vessels operating in the Pacific, rates were assessed at $11,000 per day, a drop of $2,000 on the week.
Last year, 2-strokes operating in the Atlantic averaged $53,979 per day, falling to $23,000 by the end of the year.
