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Makai Research · (@MakaiMarine) · 2026-10-16

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In shipping, engine performance and optimal speeds have a well-defined relationship between TCE earnings and bunker prices.
When TCE earnings are high relative to bunker prices, it pays to burn additional bunkers at faster speeds, in order to take advantage of higher TCEs.
No surprises in the current calcs, with most VL earnings at $600k/day or above, but the market is behaving differently.
AIS data is suggesting that average VL ballasting speeds are near 11.6 kts, and our casual survey of ballasting VLs shows that many are ballasting at 10 kts. These are slow-ballasting speeds that you would expect in low-rate markets, not when AG earnings are above $1m/day. Laden speeds remain in the usual 12-13 kt C/P range.
With earnings this high, the incremental $90k/day that owners could pick up by speeding up by 2 kts is still small relative to earnings.
Instead, speeding up by 2 kts would eliminate 10-12% of dwt demand (at a given level of tonne-miles), and earnings would not be at $1m/day.
Market observers have noted that Sinokor has continued to hold back tonnage in this market, and our survey of their fleet shows slow ballasting speeds and tonnage loitering in some odd places.
Meanwhile, average ballast speeds across the VL fleet indicate that other owners have joined the fray. With charterers in this much of a panic for crude for higher runs to meet winter product demand, owners are clearly taking advantage of the situation, but by slow steaming in ballast, they are being [fill in the blank].
Owners may be playing a huge game of FAFO with charterers, but the ultimate reversal of this spike is likely to come from FOMO. Once owners stop receiving better than last done and get the sense that earnings may have peaked, they could start to speed up to hit earlier laycans and to lock in higher freight. This would reduce dwt demand at a given level of tonne-miles, and diminish this freight rate impetus.
We will continue to monitor ballast speeds as this unfolds.
#tankers $FRO $INSW $ECO $DHT

Why it's worth your time

This explains the freight leg of the oil shock. Makai's ship-tracking read finds loaded supertankers at normal speeds but empty return legs at 10 to 11.6 knots; by its math, sailing two knots faster would remove 10 to 12% of the demand for tonnage. It also names what would end the spike: owners speeding up once new fixtures stop beating the last ones. Freight is the link between crude and delivered fuel costs that the energy-to-hardship campaign tracks. Surfaced by @Vmaxpax's quote-post; the analysis is Makai's.