- Freight rates for crude, LNG and bulk commodities are seeing a rare year-end jump instead of the usual seasonal slowdown.
- Longer voyage distances, sanctions, weather disruptions and shifting production are tightening vessel availability.
- Market uncertainty is delaying major fleet investments despite strong earnings.
Freight costs to ship crude, LNG and bulk commodities have spiked heading into the end of the year — a period that typically sees softer demand. Earnings to transport crude on major routes have climbed sharply, while LNG shipping rates have hit their highest levels in two years. Rates linked to iron ore and grain shipments have more than doubled.
The key driver behind the surge is time. Ships are spending longer periods at sea, extending delivery cycles and tightening vessel supply. Many operators believe this tightness will extend into early next year.
Sanctions, Weather and Production Shifts Reshape Trade Flows
Crude tanker strength has been supported by increased Middle Eastern output and redirected flows in Asia after sanctions disrupted Russian supply channels. LNG demand from Europe and new export projects in North America have tied up additional tonnage, lifting spot rates.
In the dry bulk market, expectations of new mining supply and weather-related delays off China pushed rates to a 20-month high. With storms slowing discharge and loading operations, vessel turnaround times lengthened.
Red Sea Disruptions and Longer Voyages Add Momentum
Conflict near strategic routes has added further pressure. Merchant ships avoiding the Red Sea have opted for longer African transits, increasing tonne-miles — the core demand metric that multiplies distance and cargo volume. This shift alone has amplified the cost impact across multiple segments.
Even after a slight easing from late-November peaks, elevated freight rates continue to influence market decisions. Some cargo buyers have considered delaying liftings, while ship operators are pursuing longer voyages to lock in higher returns.
Earnings Are Strong, But Shipowners Remain Cautious
Despite strong returns, many fleet operators are holding back on major investments. New vessels are expensive, and the market remains overshadowed by uncertainty — including the potential reopening of disrupted routes or additional vessels entering the market.
Profitability is up, confidence is restrained, and long-term strategy remains clouded by geopolitical and regulatory unknowns.
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Source: CNBC TV
