Image source: Dorian LPG
According to Shipping News Network, the liquefied petroleum gas (LPG) shipping market has recently experienced a strong rebound. Persistent congestion at the Panama Canal has boosted market sentiment, further tightening vessel supply and triggering a restructuring of global capacity patterns. The Baltic Exchange noted that the risk of prolonged delays is increasing the likelihood of more vessels diverting to the Cape of Good Hope while ballasting to the U.S., which would increase ton-miles and further tighten capacity.
Shipbroker Fearnleys pointed out in its latest weekly report that if congestion continues, more shipowners may consider rerouting via the Cape of Good Hope. Although many vessels have already booked canal transit slots, some remain waiting at ports, while others are preparing to participate in the next transit slot auction on August 14. Reports indicate that the previous auction for priority canal passage rights reached nearly $1 million, and the next auction fee is expected to set a new record.
VLGC Freight Rates Rise
Data from the Baltic Exchange shows that supported by stable Middle East demand and improved market sentiment, the average time charter equivalent (TCE) earnings for Very Large Gas Carriers (VLGCs) on the Middle East-to-Japan route have climbed to $76,115 per day. Meanwhile, the dual impact of tight Atlantic supply and Panama Canal delays has driven freight rates on the U.S. Gulf-to-Europe route to soar to $94,445 per day.
U.S. VLGC owner Dorian LPG highlighted in its Q2 financial report that factors such as adjustments to U.S.-China tariff policies, tensions in the Middle East, and reduced Panama Canal transit capacity have intensified market volatility. “These disruptions, combined with limited fleet expansion, have helped support rising freight rates despite moderate import demand and ongoing market uncertainties.”
Image source: Dorian LPG
The financial report shows that in Q2 of this year, Dorian LPG achieved operating revenue of $84.2 million, down 26.4% year-on-year; operating profit of $15.592 million, down 71.9% year-on-year; adjusted EBITDA of $38.578 million, down 50.5% year-on-year; and net profit of $10.082 million, down 80.3% year-on-year. The fleet’s average daily TCE in Q2 was $39,726, down 20.9% year-on-year, while daily management costs per vessel rose 6.99% to $11,466.
Despite the decline in revenue, the company’s Chairman, President, and CEO John C. Hadjipateras remains optimistic about the future development of the LPG market, primarily due to his confidence in the resilience and fundamentals of LPG trade. Data shows that global seaborne LPG shipments grew 3% quarter-on-quarter and 8% year-on-year in Q2, indicating increasing demand for LPG shipping services.
Additionally, the global VLGC fleet expanded slightly in Q2 with the delivery of two new vessels. By the end of 2029, the global fleet is expected to add 114 VLACs (Very Large Ammonia Carriers), equivalent to approximately 10.2 million cubic meters of capacity. Currently, the average age of the global fleet is 10.9 years, and VLAC orders account for about 28.2% of the total fleet.
According to its website, as of July 31, Dorian LPG owns and operates 26 VLGCs, including 20 eco-VLGCs, 5 dual-fuel VLGCs, and 1 modernized VLGC.
