- PG–Japan VLGC freight assessed at $89.60/mt on Aug. 14, nearing 16-month highs.
- Prolonged delays at Indian ports and Panama Canal congestion driving bullish sentiment.
- Market participants expect rates could soon breach the $90/mt mark.
Persian Gulf–Japan Very Large Gas Carrier (VLGC) freight rates have surged to their highest level in nearly 16 months as operational challenges across multiple shipping hubs continue to strain supply. Platts, part of S&P Global Commodity Insights, assessed the route at $89.60/mt on Aug. 14, up from $89.10/mt the previous day. The last time rates were higher was May 21, 2024, at $92.50/mt.
Shipping sources attributed the upward pressure to extended discharge delays at Indian ports, strength in Houston–Japan freight driven by widening arbitrage, and rising congestion at the Panama Canal’s northbound lane, which has increased auction costs. A Singapore-based shipbroker described the situation as “a perfect storm”, with all these factors still in play mid-August, according to S&P Global.
Indian Port Congestion
India has been a key driver of delays, with waiting times at ports stretching up to 8–10 days on the east coast (Ennore, Haldia, Paradip) and 7–8 days on the west coast (Dahej, Mangalore). Market participants noted that seasonal congestion during the June–September monsoon, ahead of the Diwali festive demand in October, is not unusual.
A report dated Aug. 13 showed 14 VLGCs scheduled to discharge at Haldia, of which five to six had already arrived, with one ship berthed on Aug. 13 and two more expected the following day. In the prior week, 12 ships were on the list, with four scheduled to depart between Aug. 9–12. However, industry sources stressed that substantial delays were concentrated at select ports, particularly where state-owned LPG suppliers were receiving cargoes.
Panama Canal Bottlenecks
S&P Global Commodity Insights highlighted that congestion at the Panama Canal is adding further upward momentum to freight rates. Data from the Panama Canal Authority (PCA) showed wait times for non-booked NeoPanamax LPG carriers rising from 7.5 days on Aug. 8 to 9.5 days by Aug. 10. This trend, observed since late July, has slowed vessel rotations and limited ship availability.
Transit data indicated robust demand, with July 2025 seeing 129 VLGC passages through the Panama Canal — the highest since December 2024, and an 18% year-on-year increase. Analysts noted northbound transits have recently surpassed southbound traffic, tightening capacity further.
Outlook
Market sources remain bullish, with expectations that PG–Japan freight could soon breach the $90/mt mark. “I won’t be surprised if we see something with a 9 from the Middle East,” said a Europe-based shipbroker.
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Source: S&P Global
