Surging shipping costs force Asian energy buyers to cancel US LPG cargoes

Soaring global freight rates have forced Asian buyers to cancel several non-contracted US liquefied petroleum gas (LPG) cargoes, disrupting alternative supply lines established during the Middle East conflict. Following the near-closure of the Strait of Hormuz, Asian nations aggressively turned to the US Gulf Coast to replace lost volumes. However, the resulting logistics crunch has completely erased trading margins. Exorbitant spot transit fees—with unbooked Panama Canal slot auctions approaching USD 2 million—have severely backlogged traditional routes, forcing roughly 43% of US-to-Asia LPG voyages to take the longer path around the Cape of Good Hope. This massive increase in voyage tonne-miles has caused standard Baltic Exchange LPG freight rates to more than double. The resulting price shock is heavily squeezing state-run refiners in major import markets like India, where LPG serves as the primary domestic cooking fuel, according to a report.

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