China’s LNG truck freight rates to rise further on tight capacity

26 November 2012 06:46  [Source: ICIS news]

SINGAPORE (ICIS)--China’s freight rates for liquefied natural gas (LNG) trucks are expected to rise further as a result of tight transport capacity, industry sources said on Monday.

The rates have increased by approximately 3% from late October to 23 November, they said.

The hikes are mainly because of limited availability of LNG trucks and rising LNG demand amid falling temperatures, said a source from an LNG logistics firm based in south China.

Many logistics companies are planning to raise their prices in late November, likely by yuan (CNY) 0.03/tonne (0.5 US cents/tonne) per km, if the shortage of LNG trucks worsens, the trader added.

The current shortfall in transport capacity is attributable to robust LNG demand during the traditional gas consumption peak in winter in China, thus boosting demand for LNG truck delivery, a north China-based LNG supplier said.

Moreover, the number of trucks has barely increased in 2012, while LNG supplies increased during the year after start-ups of new gas liquefaction plants in the northern areas and new LNG import terminals, the supplier added.

The expected rise of CNY0.03/tonne per km will be the biggest weekly adjustment on China’s freight rates since January 2012, according to data compiled by C1 Energy, an ICIS service in China.

However, the adjustment brings the freight rates to just a reasonably profitable level as rates have been low in China’s truck delivery market for a long time, many logistics companies said.

The freight rates for delivery distances above 2,000km were settled at CNY0.70-0.72/tonne per km on 26 November in north China, a rise of CNY0.02/tonne compared with the rates in late October, ICIS C1 data showed.

($1 = CNY6.23)

By: Jane Han

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