CASE STUDIES / CHARTERING · NOV 2025
How freight costs affect LNG routes and hedges.
The study compares operational flexibility and freight hedging in a US-to-China LNG portfolio.
+$9.84M
VALUE OF SPOT ACCESS · CHARTER HIRE $70,000/DAY
Distinguish charter hire from cargo margin.
01 · CHARTER TERMS
A time charter charges for vessel availability by the day. Longer routes use more vessel time. The study asks when European delivery plus Asian replacement supply becomes more profitable than a direct voyage.
WHO PAYS WHAT IN A TIME CHARTER
- The charterer pays a daily hire plus voyage costs: fuel, ports, canal tolls, carbon
- The owner provides the crew and covers OPEX: wages, maintenance, insurance
- Performance warranties pin speed, fuel use and boil-off; EU-ETS duties are allocated
WHERE RATES COME FROM
- Physical fixtures are private; Baltic Exchange and Spark publish daily reference rates
- Broker and PRA reports circulate fixtures, bids and offers
- ICE and CME list cash-settled freight futures and FFAs against those indices
Charter types: time charter, voyage charter, contract of affreightment and bareboat charter.
Define the reference portfolio.
02 · PORTFOLIO
Two chartered 174,000 m³ vessels carry US supply to Chinese demand during 2026. A second version can use European and Asian spot markets.
BREAKEVEN INPUTS: $20K/DAY CHARTER · DES SHORT ASIA JKM - $0.20 · SPOT EUROPE TTF - $0.29 · SPOT ASIA JKM + $0.32
Increase the charter rate.
03 · PRICE SCENARIOS
The study varies hire from $10,000 to $70,000/day. At higher rates, the flexible plan diverts eligible US cargoes to Europe and buys replacement supply in Asia.
Compare the downside.
04 · VALUE OF FLEXIBILITY
At $70,000/day, the rigid portfolio earns -$0.04/MMBtu. Spot access keeps the flexible portfolio positive in this test.
Add a freight hedge.
05 · FREIGHT HEDGE
The study applies a BLNG2-174 hedge at different ratios of on-hire vessel days. A 100% ratio holds the rigid portfolio at $0.57/MMBtu under the tested parallel freight-curve shifts.
06 · RESULT
Spot access adds $9.84M at the tested $70,000/day charter rate.
The hedge result assumes the study’s instrument, volume and parallel price changes. It does not demonstrate a complete hedge against all freight, timing or basis risks.
What this comparison shows.
07 · TAKEAWAYS
Define the reference portfolio
Two chartered 174,000 m³ vessels carry US supply to Chinese demand during 2026. A second version can use European and Asian spot markets.
Add a freight hedge
The study applies a BLNG2-174 hedge at different ratios of on-hire vessel days. A 100% ratio holds the rigid portfolio at $0.57/MMBtu under the tested parallel freight-curve shifts.
Scope of the result
The hedge result assumes the study’s instrument, volume and parallel price changes. It does not demonstrate a complete hedge against all freight, timing or basis risks.
How the study was calculated.
08 · CALCULATION
Set up the comparison
A time charter charges for vessel availability by the day. Longer routes use more vessel time. The study asks when European delivery plus Asian replacement supply becomes more profitable than a direct voyage.
Calculate the alternatives
The study varies hire from $10,000 to $70,000/day. At higher rates, the flexible plan diverts eligible US cargoes to Europe and buys replacement supply in Asia.
Review the result
Spot access adds $9.84M at the tested $70,000/day charter rate.
Modelled results depend on the contracts, prices and operating assumptions used.