LNG shipping economics: freight, boil-off and delivered energy cost

AI-generated editorial illustration; it does not depict a verified project, actual prices or chart data.

1. Economic takeaway

An LNG cargo has both a voyage-cost numerator and a delivered-energy denominator. Longer time can raise charter charges while reducing the energy available for sale, so a flat freight adder per loaded MMBtu can understate the delivered cost. The right calculation depends on the charter contract, vessel equipment and treatment of boil-off gas. Do not apply a standard daily loss to every ship: natural vapor generation, fuel consumption, reliquefaction and net custody-transfer loss are different quantities. The scenario below is a deliberately simple loss assumption, not a performance claim about a fleet or a physical simulation of a particular carrier.

2. Date and delivery boundary

For August and September 2026 LNG contracts, archive loading and unloading energy certificates separately from price fixing. There is no verified public product-specific charter quotation for those months in the sources reviewed here. EIA’s October 6 outlook, completed October 1, is a forecast publication, not a charter fixture. Its LNG explanation describes physical stages but does not prescribe the example’s boil-off. UNCTAD’s September 2025 report is historical logistics context. October is incomplete on 7 October 2026; none of the scenario prices is an October average.

The boundary is LNG energy purchased at the loading terminal and delivered at unloading custody transfer, before regasification, transmission, downstream tax and power generation. All energy quantities use HHV MMBtu and all money is nominal USD. Do not combine an LHV turbine heat rate with this HHV fuel price without conversion. EIA’s LNG explanation distinguishes liquefaction, cryogenic transport and regasification; these are separate cost stages. EIA’s October 6 outlook has a model cut-off of October 1 and supplies market forecasts, not a gas-carrier charter offer. A commodity import unit value is likewise not a spot charter rate or a specific voyage invoice.

3. Worked project calculation

Illustratively load 1000000 MMBtu at 10 USD/MMBtu, costing 10000000 USD. Assume a 20-day paid voyage at 60000 USD/day, 300000 USD terminal fees and net unrecovered energy loss of 0.1% of the original loaded quantity per day. Delivered energy is 1000000 × (1 − 0.001 × 20) = 980000 MMBtu. Total cost is 10000000 + 1200000 + 300000 = 11500000 USD. Delivered unit cost is 11500000 / 980000 = 11.7347 USD/MMBtu HHV. Assume propulsion is met from the modeled cargo consumption with no separate bunker invoice; otherwise add purchased fuel and revise the net cargo balance, rather than counting boil-off as both lost product and an additional identical fuel purchase.

4. Sensitivity and chart

Illustrative USD/MMBtu on an HHV basis: loaded energy 1000000 MMBtu at 10 USD/MMBtu, charter 60000 USD/day, fixed terminal fees 300000 USD, net loss 0.1% of initial energy per day. No separate propulsion fuel is charged. Voyage durations are assumptions, not observed August/September 2026 LNG rates; regasification is excluded.

5. Evidence before commitment

Energy quantity should come from the agreed custody-transfer method, with composition, temperature and calorific-value convention stated. A cargo mass in tonnes is not itself an MMBtu value; a fixed energy-per-tonne shortcut can hide composition differences. Reconcile loading certificates, heel remaining on board and unloading certificates before assigning the difference entirely to boil-off. Sampling and measurement uncertainty are not the same as commercial loss allowances. The simplified linear loss model here is suitable only for a transparent planning comparison over the stated durations, not for verifying actual vessel performance.

A reliquefaction system can retain energy but uses power and may change fuel use. A dual-fuel propulsion system can consume vapor that otherwise requires management. Purchased liquid fuel, forced vaporization and boil-off sold or recovered require distinct entries. The allocation depends on the charter party: the entity paying hire may not own the cargo consumed, and a speed instruction may move cost between parties. Ask who bears excess consumption, whether guarantees apply to laden and ballast legs, and which weather or waiting exceptions affect performance claims.

Terminal capacity is another gate. A cheap charter arriving outside a nominated unloading slot can incur waiting and change delivery timing. Include guaranteed or provisional slot status and any minimum unloading rate in the comparison. Regasification reservation and downstream gas transmission remain excluded from the worked total; add them if the required boundary is gas delivered to a generator. Never compare this terminal-liquid cost directly with a delivered pipeline-gas offer without that extension.

6. Decision and contract controls

For ten, twenty and thirty days, the model gives costs 10900000, 11500000 and 12100000 USD and delivered energy 990000, 980000 and 970000 MMBtu. Quotients are 11.0101, 11.7347 and 12.4742 USD/MMBtu HHV. Voyage time here equals paid charter time only by explicit assumption; an actual round-trip charter may include ballast days and terminal waiting. Request vessel-specific consumption guarantees, heel quantities, measurement rules and allocation of delay. A 30-day route is 0.7395 USD/MMBtu above the base, but a faster option must be evaluated with its additional hire, fuel and port charges before asserting savings.

7. Frequently asked questions

Is the 0.1% daily loss a fleet standard? No. It is an illustrative net loss of initial energy, without compounding, and must be replaced by vessel and custody-transfer evidence.

Can a container freight index estimate LNG charter hire? No. Gas-carrier capability, contract duration, voyage and market are different.

Why is the denominator delivered energy? The buyer purchases usable delivered energy. Dividing the same expense by loaded energy understates the unit cost when net energy is consumed or lost. If recovered gas is credited, show its value and quantity explicitly.

8. Sources and related reading

Primary sources

• EIA — Liquefied natural gas explained
• EIA — Short-Term Energy Outlook, 6 October 2026
• UNCTAD — Review of Maritime Transport 2025

Related guides

• Port delay economics: working capital, storage and equipment demurrage
• Diesel and bunker freight surcharges: an auditable indexation model