INTRODUCTION
This week’s market cycle is less about direction and more about drag. Oil inventories are piling up from Fujairah to Cushing, yet tanker rates remain buoyant amid policy-driven dislocations. Meanwhile, hopes for global emissions coordination collapsed at the IMO just as port fees and carbon schemes begin reshaping trade lanes in practice. And in dry bulk, Brazil’s agricultural engine is humming, but geopolitical pressure on soybeans and wheat flows is sharpening freight risk. What used to be market turbulence is now the standard current. For charterers, volatility has become embedded.
Wet Bulk – Tonnage Tight, but Fundamentals Crack
Tanker rates continued to defy gravity this week, particularly for VLCCs moving West Africa and US Gulf cargoes. Port fees, tariff reciprocity, and inventory builds are all distorting route economics in ways that elevate earnings, even as crude benchmarks slip to five-month lows.
Physical fundamentals are softening. The U.S. EIA reported a surprise surge in U.S. inventories, while Fujairah’s ship fuel sales fell to a three-month low. But tightness in the freight market is being driven less by demand and more by constraints in vessel productivity and fleet segmentation.
As noted by Panagiotis Krontiras, Tanker Freight Analyst at Kpler, during their webinar, “Tanker Market Q4 Outlook” last week, “vessels sanctioned under OFAC experience a huge drop in productivity, around 65%, compared to about 20% under UK or EU restrictions.” That gap is significant for charterers: it removes a swathe of available tonnage from prompt rotation. “This means,” he added, “we will see lengthening position lists in the mainstream commercial fleet.” This implies that securing compliant, high-turnover vessels is becoming a priority, even with abundant global crude flows.
Meanwhile, LPG and LNG markets saw upward rate pressure due to increased Asian import appetite, but the shadow of excess capacity looms, with North American LNG exports set to more than double by 2029.
Charterer lens – Wet Bulk:
- Account for shrinking prompt tonnage: U.S.-sanctioned vessels face up to 65% productivity loss, tightening mainstream supply and lengthening position lists, particularly for compliant VLCCs.
- Factor in compliance-driven rate premiums: As sanctioned fleets become less productive, expect stronger rate pressure on clean, high-turnover tonnage.
- Watch for geopolitical rerouting: Diversions like Sinopec’s recent moves and rising Canadian crude intake suggest growing exposure to policy-led dislocation.
- Short-term flexibility may outperform long-term certainty: Repositioning trends and winter demand shifts argue for optionality in voyage planning and rate clauses.
Dry Bulk – Brazil Booms While Russia Retreats
Dry bulk sentiment is increasingly bifurcated. On one hand, Brazilian cement and grain exports are powering volume optimism. On the other, Russian wheat shipments have fallen sharply, down 18% in Q1 of the 2025/26 marketing year, as buyers seek diversified origins and cheaper freight options. China’s use of soybean import flows as a trade bargaining chip has cast a shadow over US Gulf exporters, even as harvest volumes remain robust.
Baltic indices reflected the friction. The Capesize market softened slightly on reduced coal demand and high transport costs, particularly for Russian-origin cargoes, while Panamaxes and Supramaxes held firmer ground thanks to South American grains. Port congestion remains a swing factor. Antwerp, for example, has a backlog of 160 ships, softened only by a brief reprieve from labor strikes. And while rates held steady week-on-week, the bigger shift may be behavioral: charterers are showing increased preference for flexible laycans and port options.
Charterer lens – dry bulk:
- Expect freight premiums for non-Russian grains; align routing strategies to avoid congested EU ports where possible.
- China’s political signaling via soybean flows adds uncertainty for US exporters: hedge exposure accordingly.
- Where possible, secure contracts with built-in laycan flexibility to offset terminal disruptions and trade policy swings.
Other / Regulatory – Emissions Policy Paralysis, Fee Pressure Mounts
The carbon cost debate entered a new phase: not with resolution, but with delay. The IMO once again deferred any concrete decision on carbon pricing, bowing to geopolitical fault lines between the US, EU, and emerging economies. While industry consensus on the inevitability of green fuel transition grows, regulation lags behind commercial reality.
In the meantime, action is being taken unilaterally. The US has scaled back but implemented reciprocal port fees on Chinese vessels, mirroring similar moves by Beijing. Singapore is now in talks with Australia on carbon market cooperation, while the EU has rejected mass balancing, a method that might have allowed Russian crude to be relabeled through third countries. All these decisions, or indecisions, leave charterers in a regulatory limbo where the absence of global alignment creates fragmented compliance and pricing environments.
Elsewhere, biofuel blends are seeing uptake by shipowners trying to hedge reputational and regulatory risk, and bunker markets remain volatile, with Rotterdam sales slipping as demand for VLSFO dips. The G20 VLSFO index dropped for the fifth consecutive session, reflecting both oversupply and uncertain regulatory signals.
Charterer lens:
- No global carbon pricing yet, but local/regional measures are accelerating: model these into voyage cost projections now.
- Track bunker market movements closely: volatility in fuel prices and availability of compliant blends will affect TCE calculations.
- Trade-related port fees (e.g., US-China) are now a fixture: adjust routing and operational costs to reflect them in tender pricing.
Final Word
This week underscores a reality charterers can’t ignore: rate pressure is increasingly decoupled from physical fundamentals. Instead, policy, politics, and logistics chokepoints are reshaping market behavior. Carbon compliance, port fees, inventory builds, and trade flow recalibrations are now structural forces demanding attention, no longer mere background noise. For voyage planners and freight risk managers alike, the premium now lies not in forecasting price curves, but in navigating the cracks forming between them.
Until next week,
— The Voyager Team
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