LPG carrier market sees strong gains on Panama Canal congestion

On 8 August, the Baltic Exchange noted the risk of prolonged delays is increasing the likelihood a significant number of vessels ballasting to the US will divert via the Cape of Good Hope – a move that would increase tonne-miles and further tighten tonnage lists.

Shipbroker Fearnleys, in its 6 August weekly report, said owners may increasingly consider the Cape route if congestion persists. While many vessels have already booked Canal transit slots, nine were waiting in Balboa and another eight were in position to meet the next auction slot date of 14 August. “With auction fees closing in on US$1M this week, we might just see fees exceed that level,” Fearnleys commented.

Rates on the rise

Baltic Exchange data shows that very large gas carrier (VLGC) time charter equivalent (TCE) earnings on the Ras Tanura–Chiba route (Middle East Gulf to Japan) rose to US$76,115 per day, supported by steady Middle Eastern demand and firmer market sentiment.

In the Houston–Flushing trade (US Gulf to Continent), TCE earnings surged to US$94,445 per day, driven by tight Atlantic supply and Panama Canal-related delays. The Atlantic firmness also lifted Houston–Chiba earnings to US$74,814 per day.

Market drivers

US-listed Greek owner Dorian LPG reported in its early August Q2 earnings that geopolitical developments have contributed to market volatility. The quarter began with the impact of US–China tariffs, while tensions in the Middle East dominated later months.

“These disruptions, combined with limited fleet additions, helped support freight rates despite moderate import demand amid ongoing market uncertainty,” the company said.

Dorian’s presentation showed global LPG liftings up 8% year-on-year, with US and Middle Eastern waterborne exports rising 6%. According to shipbroker Banchero Costa, the US now accounts for 45% of total export volumes.

On the supply side, the global VLGC fleet expanded modestly in Q2 2025 with two new deliveries. Looking ahead, an additional 114 VLGCs/VLACs – equivalent to roughly 10.2M-m³ of capacity – are scheduled for delivery by the end of 2029.

The global fleet now averages 10.9 years of age, with the current VLGC/VLAC orderbook representing about 28% of existing tonnage.