An oversupply of tankers has led to record low overseas shipping rates. Even though the U.S. LNG supply is ramping up, its growth rate hasn’t be able to keep up with a surfeit fleet of tankers.

LNG shipping rates are at a historical low, S&P Global reported on Jan. 27. An anonymous freight broker said that one LNG tanker shipping to Europe was recently chartered at rates that translated into a daily loss of $7,000 to $8,000.

Shipping in the Pacific has also suffered. According to S&P’s Platts pricing, two-stroke LNG carriers shipping from the U.S. to Asia were working at a rate of $14,000 per day in January. Twelve months ago, the rate averaged $90,000 per day.

A two-stroke LNG carrier is powered by the LNG it carries. Older vessels use steam or diesel.

The LNG tanker market has suffered from low rates since the fall, Oystein Kalleklev, CEO of FLEX LNG, told investors during the company’s earnings meeting in November.

“Rates are softening, and they are down to very low levels, levels we have never really seen in the fourth quarter before,” Kalleklev said. “And why is that? It's really about the numbers of ships for delivery.”

In 2024, global shipping companies added 68 new LNG tankers to the world’s fleet, a record high, according to S&P.

In 2025, shipbuilders expect to complete another 88, plus another 84 next year, according to FLEX LNG. While some fleet operators have considered temporarily mooring a fraction of their fleet, most prefer to keep vessels available to quickly react to the spot market, according to S&P.

LNG tankers are among the most complicated ships to build, taking up to 30 months to complete—primarily in Chinese and Korean shipyards. Many of the ships embarking for the first time over the next two years were ordered during a tight market and in anticipation of LNG export projects that were expected to start production before the end of 2025.

The current market will be difficult for shippers but will be a positive for LNG traders and European customers who can take advantage of the low transport costs, Bloomberg reported.

North American LNG exports are expected to grow dramatically over the next two years. Two new export projects, Venture Global LNG’s Plaquemines and Cheniere Energy’s Corpus Christi Stage 3, both started LNG production at the end of 2024.

LNG Canada, with a starting capacity of 1.84 Bcf/d, is expected to begin production in the summer. Exxon Mobil and QatarEnergy’s 2-Bcf/d Golden Pass LNG’s start date has been delayed to late 2025 or 2026.

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