Asian VLCC rates rise due to congestion, robust demand

Asian VLCC freight rates have climbed up and are now hovering at their highest levels since the post-COVID recovery, as congestion at Chinese ports and rising loading demand slow fleet turnaround, tightening regional tonnage availability amid growing global inquiry, industry sources said.

This surge pushed the cost of transporting crude from the Persian Gulf to China to $29.39/mt on Oct. 30 or W132.5, according to S&P Global Commodity Insights data.

After Platts published its Oct. 29 assessments in Singapore hours, activity during London trading on Oct. 29 saw a Chinese state-owned company placing the Front Otra on subjects for Nov. 16 to haul 270,000 mt of crude from the Persian Gulf to China at w127.5. This marked a significant jump from the last Platts assessment of w105 on the same day, with benchmark routes last seeing similar highs in mid-March 2023.

Platts' Global VLCC Index (GVI 7) for a 0.5%S, non-eco VLCC was assessed at $100,610/day on Oct. 29. The GVI 7S, which reflects scrubber-fitted, eco VLCCs, was assessed at $109,072/day, based on the Oct. 29 Persian Gulf–China route assessment at w105.

"[The] tonnage list is reasonably tight. No choice [for charterers], the West is quite active also ... too many boats will be lured toward [the] West," a VLCC charterer said, alluding to the current bullish freight market.

Industry sources attributed the upward momentum in ship rates to the tight ship supply, as major loading regions globally experienced an increase in loading demand, a trend that is further supported by the recent surge in VLCC activity driven not only by rising loading demand but also by growing congestion at Chinese ports.

Tonnages supply shrinking

According to S&P Global Commodities at Sea, the global VLCC laden-ballast spread rose to 39 in the week beginning Oct. 26. This marks a sharp increase from minus 15 a week earlier.

The laden-ballast spread reflects the difference between the number of laden and ballast VLCCs. A value closer to zero indicates an increased number of laden ships, suggesting that more ships are transporting cargo compared to those sailing empty.

In comparison, on Aug. 10, the VLCC laden-ballast spread widened to minus 131, while the benchmark Persian Gulf–China route fell to the high w50s, reflecting the market's weakness at that time, according to CAS. This indicates that the increasing number of laden ships did not lead to stronger rates for the benchmark route.

Chinese port congestion

The global VLCC fleet has become increasingly active, driven not only by a recent rise in loading demands but also by a significant upward trend in the number of anchored VLCCs at Chinese ports over the past month, market sources said.

"Anchored VLCC counts in Chinese ports more than doubled between late September and late October, rising from approximately 10 in the week beginning Sept. 21 to a year-to-date high of 21 by the week beginning Oct. 26. This congestion prevents laden VLCCs from completing discharge operations in time and [embark on] their ballast voyages, ultimately reducing available tonnage in major loading regions," Kevin Zhao, shipping analyst at Commodity Insights said.

Meanwhile, multiple charterers reported facing a shortage of available tonnage when seeking offers, with only about two offers typically received for each cargo shown for loading. In some cases, charterers had to compete to secure ships, further highlighting the tightness in the VLCC market.

A VLCC charterer based in Beijing said there was a sudden increase in cargo volumes from the Middle East and the US Gulf. With approximately 12 cargoes in the market on Oct. 29 and only around 25 ships available, tonnage is returning slowly, but the emergence of cargoes in clusters helps maintain a firm sentiment among owners, the chartering source said.

Shift in trade flows

In addition, changes in trade flows have contributed to the strengthening VLCC market, with India's monthly crude imports from the US on VLCCs jumping to 464,000 b/d in September and 356,000 b/d in August, marking a significant increase from the January-August 2025 monthly average of 217,000 b/d, according to CAS.

This shift has translated into greater VLCC loading demand, as the longer distance between the US and India typically necessitates the use of VLCCs.

Sailing speed slows

Voyage duration has also been impacted by operational factors, further influencing the VLCC market dynamics.

The average VLCC laden speed was approximately 12.4 knots in week 38, which began on Sept. 14, but slowed to roughly 12.1 knots by week 43, starting on Oct. 20, according to CAS. While this may seem like a minor change, it leads to a significant increase in voyage duration.

For instance, a voyage from Ras Tanura to Ningbo would take around 19.32 days at 12.4 knots, compared to 19.80 days at 12.1 knots, resulting in a difference of 0.48 days. This extended voyage time contributes to the overall demand for VLCCs as shipping schedules become more constrained.