Q&A: Why Tanker Freight Is Exploding While Ton-Miles Fall — Hormuz Relays Explained

How high have tanker earnings actually gone?

Very high by any recent standard. Data published on 11 November put the Middle East Gulf-China TD3C round voyage at about $1.35 million per day for VLCCs. The Shanghai Shipping Exchange's CTFI index printed the Ras Tanura-Ningbo CT1 route at roughly $1.17 million a day on standard speed, with the West Africa-Ningbo CT2 route near $467,000.

If the fleet is growing and ton-miles are down, why are rates exploding?

Because effective capacity has shrunk even as the fleet expands. Breakwave Advisors noted on 3 November that Middle East VLCC ton-miles sit 34 percent below 2025 levels, yet freight is unusually expensive. Around 141 tankers are engaged in ship-to-ship transfer relays around the Strait of Hormuz, locked into short-haul work inside the Gulf instead of competing globally. A charterer in West Africa or the Mediterranean does not care how many ships exist on paper; what matters is a vessel that arrives on time and meets loading requirements, and that pool is thinning fast.

What does the security picture add?

Friction, and plenty of it. The IMO had logged 131 incidents in the region as of 9 November, with 25 seafarers killed since the conflict began, and vessels were damaged in separate incidents on 4, 5 and 7 November. War-risk premiums are quoted vessel by vessel, which shortens quote validity and complicates fixture timing.

What have owners already locked in?

Real money. DHT Holdings reported on 9 November that its spot VLCC fleet earned $167,100 per day in the third quarter, and 68 percent of fourth-quarter spot days are already booked at an average of $579,900 per day, discharge to discharge. ADNOC L&S spent about $1.3 billion on six VLCCs and five VLGCs, and OPEC output has recovered to roughly 88 percent of pre-conflict levels, so cargoes keep coming back even as tonnage stays pinned in the Gulf.

Any signs of cooling?

The weekly BDTI fell 11.5 percent, yet spot availability east of Suez remains tight — the index dip reflects a lull in fresh fixing, not an easier market for charterers.

What should cargo owners do now?

Energy and chemical consignments routed through the Gulf face quotes with very short validity and war-risk premiums priced per vessel. Fix laytime and port-change liability in contracts before fixing tonnage, leave room in budgets for premium and re-nomination costs, and build buffer into December schedules. These rates are unlikely to ease much before year-end.

Source: Based on China Finance Net, SSE CTFI index data, Xinde Marine News citing Breakwave Advisors and DHT Holdings, and Green Worldwide's Week 46 freight update.

For energy and project cargo via the Gulf, see Yufeng's Middle East route page.