Lease Rates for LNG Cargo Ships Hit 5-Year Lows; Too Many Ships

Economics, in its purest form, is unforgiving. Economics is science, like the laws of gravity. In a market (in this case, the world market) where there is too much supply for existing demand, the seller/supplier will end up lowering the price charged for the good or service. Others in the market are willing to drop prices to attract scarce customers, which turns into a race to the bottom. Such is what's happening right now with LNG cargo carriers. A flood of new carriers has recently been added to the world's supply. Because of the Biden-Harris "pause" on new LNG export approvals (and other factors), LNG exports have not expanded at the same rate as available cargo vessels. The result is that the bottom has dropped out of how much it costs to rent an LNG carrier. The rates are down 87% in the Atlantic and 78% in the Pacific from year-ago levels and are the weakest since at least 2019.

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