Longer voyages from the United States and drought-related restrictions at the Panama Canal drove VLGC earnings to new highs, with the cost of securing a priority transit slot reaching USD 5.3 million.

Asian buyers turn to US supply

US LPG continues to replace disrupted Middle East supply to India and East Asia, keeping ships at sea for substantially longer on each voyage. The shift increases the number of vessels needed to deliver the same volume of cargo and leaves fewer ships available for new loadings. Clarksons’ Houston-to-Chiba earnings benchmark rose to approximately USD 192,000 per day by 25 September, up from USD 163,000 on 11 September.

Charterers are also committing to higher rates for longer periods. One-year timecharter rates for a modern VLGC reached approximately USD 110,000 per day by late September, 61% above the August average and more than twice the 2025 average. Charterers are securing ships for longer periods, suggesting they expect longer voyages to Asia to keep vessel availability tight.

Panama congestion adds to the shortage

El Nino-related drought has reduced the water available to operate the Panama Canal’s locks, limiting access to the shortest route between the US Gulf and Asia. Daily transit capacity fell to 34 ships in the beginning of September and 32 mid-month. Around 5% of the VLGC fleet was waiting at the Canal in early September, compared with approximately 2% in August. The pressure on slots was illustrated by SK Gas’s record USD 5.3 million payment in late August for G. Spirit’s 1 September transit.

We expect longer US voyages and tight vessel availability to support firm earnings through the winter. Further ahead, Clarksons forecasts approximately 40 VLGC deliveries in 2026 and 48 in 2027. The market’s ability to absorb these ships will depend on Canal capacity and the extent of the recovery in Middle East exports, which would reduce reliance on longer US voyages.

Sources: Euronews, Clarksons & Seatrade Maritime