VLGC freight rates from Houston to Chiba, Japan, reached $245/mt Sept. 21 for the first time since 2015, according to LPG shipping sources.
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VLGC rates reached that level during a time when prices have been pressured due to a widening Houston-Asia arbitrage and an ongoing backlog of vessels looking to pass the Panama Canal, LPG shipping sources said.
Houston to Chiba, Japan, freight rates were last higher July 23, 2015, at $280/mt. Rates from Houston to Northwest Europe are also up, at $140/mt.
The high rates come amid ongoing delays at the Panama Canal due to low water levels that are costing ship charterers millions of dollars, shipping brokers said. Some are opting to return to the US via alternate shipping routes like the Cape of Good hope or the Suez Canal.
"A 13-day delay at Panama at current freight rates ($140k/day) is expensive, $1.8ish million," an LPG shipping broker said. "The auction system commanded a payment of $2.45m a week ago, so Panama is difficult and expensive."
Using alternate routes like the Cape of Good Hope or the Suez Canal to return to the US has caused a freight shortage because these routes add at least 20 additional days to the voyage, LPG shipping sources said.
According to Sept. 21 Panama Canal traffic data there were 115 vessels backlogged at the Panama Canal. Of those 100 were backlogged for the Panamax locks, while 15 were backlogged for the Neo-Panamax locks.