MB Capital Strategies Glossary — Updated June 2026
Freight rates are the prices paid for transporting cargo by sea. They represent the primary revenue source for shipping companies — and the single biggest driver of shipping stock performance and dividends.
Voyage Charter ($/ton or Worldscale points): A per-voyage rate for transporting a specific cargo between two ports. Tanker rates are often quoted in Worldscale (WS) points, where WS 100 = a reference rate calculated by Worldscale Association. VLCC AG-East WS 60 means 60% of the reference rate.
Time-Charter Equivalent (TCE $/day): The voyage rate converted to a net daily earning, after deducting port costs, fuel, and canal fees. This is the standard comparison metric — see TCE Rate for details.
Tanker Freight Rates:
• VLCC (Arabian Gulf to Far East): ~$20,000-80,000/day depending on cycle
• Suezmax (West Africa to Europe): ~$15,000-60,000/day
• Aframax/LR2 (Mediterranean/North Sea): ~$12,000-50,000/day
• MR (Product tanker, clean): ~$10,000-35,000/day
Dry Bulk Freight Rates:
• Baltic Dry Index (BDI): Composite of Capesize, Panamax, Supramax, Handysize rates
• Capesize (iron ore/coal, 180,000+ DWT): $5,000-60,000+/day
• Panamax (grain/coal, ~80,000 DWT): $8,000-30,000/day
LNG/LPG Charter Rates:
• LNG carriers: $60,000-100,000+/day (long-term TC), or spot $40,000-150,000+ during demand spikes
• VLGC (LPG): $25,000-80,000/day
Freight rates are set in a global auction market — every day, shipowners and cargo owners negotiate prices. The key supply-demand drivers:
Demand drivers: Global trade volume growth, commodity production cycles, ton-mile demand changes (longer routes = higher demand), seasonal import patterns (heating oil winter, grain harvest).
Supply drivers: Fleet size (active vessels), vessel delivery schedule from shipyards, scrapping of older vessels, drydock schedule reducing available tonnage.
Freight markets are notoriously cyclical. The key insight for investors: shipping stocks lag freight rates by 1-3 quarters. By the time consensus recognizes a freight cycle, the best entry points are often gone. Marco's approach: enter when the orderbook-to-fleet ratio is below 10%, new vessel deliveries are 2+ years away, and spot rates are beginning to recover from a trough.
For spot-market shipping companies (TORM, Frontline, DHT, Hafnia), the dividend math is mechanical: freight rate → TCE → operating cash flow → dividend. A VLCC tanker moving from $30,000/day to $60,000/day doubles the per-vessel cash flow available for distribution. This is why variable shipping dividends can move 100-400% in a single year — not management discretion, but pure market mechanics.
TCE Rate · Charter Rates · Day Rate · Baltic Dry Index · Spot Market · VLCC
About Marco Bozem · Full Glossary · Best Tanker Stocks 2026
Marco Bozem
Investor & Analyst | Hard Assets, Dividends, Shipping | MB Capital Strategies
Marco analyzes commodity and dividend stocks with focus on Shipping, Mining, and Energy. All analysis is based on publicly available reports and personal judgment. Not investment advice.