Is there a ceiling to VLGC freight rates?
uring the last two months that the Middle East Gulf conflict has been going on, we have seen record repositioning of the mainstream VLGC fleet toward the US Gulf Coast, peaking at 150 vessels mid-March.
As of April 30, the count of ballast VLGCs en-route to the USGC has returned to the January 2026 average, as US LPG exports reached a dataset high this April, at 2.8mbd.
Despite large swings in vessel availability, BLPG3 (USGC-to-Chiba) freight rates still continue to widen and the question now becomes whether there is a limit to this upside.
Pull from Asia strengthens, Panama congestion rises
US LPG exports to Asia reached a dataset record this April at 1.7mbd, rising 21% m-o-m. Continued tightness in MEG volumes has structurally strengthened US market share across Asia into June, as we highlighted previously.
Notably, US LPG exports pointed to Northeast Asia (NEA) strengthened by 23% m-o-m, setting a seasonal record this April at 1.1mbd. Almost every 10th US LPG cargo for NEA sailed around the Cape of Good Hope (COGH) in April due to growing congestion at the Panama Canal.
An adjacent buildup of laden oil tankers north of the canal has also contributed to a sizeable congestion for VLGC carriers compared to prior months.
In April, 40% of US LPG-laden vessels headed to Asia have sailed around the COGH. Meanwhile, auction costs for Neopanamax lock transits tracked at $1.076mn on April 29, reflecting nearly a 4x rise since the MEG conflict start (Argus).
With that, BLPG3 (USGC-Chiba) freight rates continue to climb upwards, having peaked to late-2023 levels of Panama Canal draught-period at $244.8/t on April 29.
Given demand for US LPG cargoes is firm, global buyers relying heavily on US volumes, congestion at the Panama Canal showing no ease, and some US-origin voyage times extend by 20+ days (due to COGH) freight rates will likely remain elevated.
Outlook for US LPG supply remains strong
As of April 28, 13% of the mainstream VLGC fleet is ballast in the Atlantic Basin, having sailed or currently in-transit from the Pacific Basin toward the US Gulf Coast. This is a 3pp rise compared to January 2026 daily average – a previous record in US LPG exports.
This suggests that US LPG loadings will likely remain robust in May, even with longer transit times around the Cape of Good Hope.
Meanwhile, mainstream LPG exports from the Middle East in April (excluding Iran) continue to track low at ~215kbd, pressuring laden-to-ballast vessel ratios in the region to historical minima.
hellenicshippingnews…