Record 2015 and 2016 VLGC Deliveries Could Affect Freight Rates

by Ship & Bunker News Team
Monday January 5, 2015

Following a glut of orders in orders placed in 2013 and 2014, over the next two years a record number of very large gas carrier (VLGC) deliveries are expected, creating more capacity that could weigh down freight rates, IHS Maritime 360 reports

According to IHS Maritime data, 35 VLGCs will be delivered this year, while 48 will become operational in 2016, compared to a previous high of 27 in 2008. 

Between 2014 and 2017, new orders are expected to make up 54 percent of fleet capacity. 

"The vast majority of orders are at established South Korean and Japanese yards, so do not expect many delays or cancellations," said Italian shipbroker Banchero Costa.

"The delivery of all these vessels over the next two to three years may lead to oversupply and pressure of the market."

Gas rates have surged over the past year alongside a ramp up of American shale gas flooding into the market. 

The increased demand over the past few years has reportedly led to a significant hike in VLGC orders over the past two years, as investors have rushed to acquire tanker fleets.