Rising LNG Demand as Russian Natural Gas Alternative Drives Up Maritime Freight Rates

LNG Carrier Daily Spot Freight Rate Increases Up to $450,000

Korea Shipbuilding & Offshore Engineering LNG Carrier [Image source=Yonhap News]

[Asia Economy Reporter Kim Pyeonghwa] Due to the suspension of Russian natural gas supplies, demand for liquefied natural gas (LNG) in Europe has surged, causing related maritime freight rates to rise rapidly.

On the 20th (local time), the U.S. Wall Street Journal (WSJ) reported this news, stating that additional freight rate increases may occur during the winter when energy usage rises. It also included that related freight rates may normalize only by the second quarter of next year.

According to the Baltic Exchange in London, UK, the daily spot freight rate for LNG carriers this week reached $450,000, six times higher than at the beginning of this year. Local forecasts suggest that daily freight rates on major shipping routes such as between Texas, USA, and Northern Europe could rise to $500,000. In fact, Clarkson, a UK shipbroking company, predicted that daily freight rates could reach $1,000,000 ahead of winter.

Local shipowners and shipbrokers reported that most LNG carriers currently operating are heading to Asia, their major customer. U.S. LNG export companies also added that they are expanding transportation capacity to reduce Europe’s dependence on Russian gas. In some ports along the Mediterranean coast of Europe, cargo volumes have recently increased, and since there are no regasification terminals to convert LNG back into gas, LNG carriers have been waiting for four days to unload.

The background to this situation is the Russia-Ukraine war. Russia’s invasion of Ukraine caused problems in the global fuel supply chain, affecting related freight rates as well. Last year, LNG carrier freight rates ranged from $30,000 to $300,000.

This content was produced with the assistance of AI translation services.