Guide
The freight market: Baltic indices, ship sizes and routes
How freight for tankers, bulk carriers and gas carriers is priced, what the ship sizes mean, and what the Baltic indices actually measure.
How freight is priced
A shipowner owns and operates the ship. A charterer – an oil company, a trader or a mining company – needs cargo moved. Shipbrokers match ships with cargoes and negotiate the contracts, which are called charter parties:
- Voyage charter: hire for one voyage. Paid per tonne or in Worldscale, and the owner pays fuel (bunkers) and port costs.
- Time charter: hire of a crewed ship for a period. Paid per day, and the charterer pays fuel and port costs.
- Bareboat charter: hire of the ship without crew; the charterer operates it.
To compare voyages with daily rates, the market converts to TCE (time charter equivalent): freight income minus voyage costs, divided by the number of days the voyage takes.
Tanker voyage freight is often quoted in Worldscale. The Worldscale Association publishes a table every year with a nominal rate in USD per tonne for each route, and the market quotes the price as a percentage of it: WS 100 is the table rate, WS 50 half of it.
The ship sizes
Ships are grouped into size classes by what they carry and how big they are. The names often refer to limits: Panamax to the locks of the Panama Canal, Suezmax to the Suez Canal, and Capesize to ships too large for the canals that sail around the Cape of Good Hope and Cape Horn. The boundaries between classes vary between sources; the table uses the Baltic Exchange's reference ships and cargo sizes, which is what the indices actually measure.
| Class | Carries | Baltic reference | Example route |
|---|---|---|---|
| VLCC | Crude oil | 260,000–270,000 t cargo | TD3C Middle East Gulf → China (270,000 t) |
| Suezmax | Crude oil | 130,000–145,000 t cargo | TD20 West Africa → UK-Continent (130,000 t) |
| Aframax | Crude oil | 70,000–100,000 t cargo | TD7 North Sea → Continent (80,000 t) |
| LR2 | Clean products and naphtha | 75,000 t cargo | TC1 Middle East Gulf → Japan |
| LR1 | Clean products | 55,000–65,000 t cargo | TC5 Middle East Gulf → Japan (55,000 t) |
| MR | Clean products (petrol, diesel) | 37,000–40,000 t cargo | TC2 Continent → US Atlantic coast (37,000 t) |
| Capesize | Iron ore and coal | 182,000 dwt | C3 Tubarão → Qingdao (170,000 t iron ore) |
| Panamax (Kamsarmax) | Coal, grain and other bulk | 82,500 dwt | P1A Skaw–Gibraltar transatlantic round voyage |
| Supramax (Ultramax) | Grain, fertiliser, steel and minor bulk; own cranes | 63,500 dwt | S2 North China, one Australian or Pacific round voyage |
| Handysize | Smaller bulk cargoes; own cranes | 38,200 dwt | HS2 Skaw–Passero trip to Boston–Galveston |
| LNG carrier | Liquefied natural gas | 174,000 m³ | BLNG2 Sabine Pass–UK round voyage |
| VLGC | LPG (propane and butane) | 44,000 t cargo | BLPG1 Middle East Gulf → Japan |
Deadweight (dwt) is how much the ship can carry including fuel and stores, so the cargo is somewhat smaller. “Clean” product tankers carry refined products such as petrol, diesel and jet fuel, while “dirty” tankers carry crude and fuel oil.
The Baltic indices
The Baltic Exchange in London publishes daily assessments of the freight rate on a set of standard routes, based on reports from a panel of shipbrokers. The routes are combined into indices:
- The Baltic Dry Index (BDI) covers dry bulk only. According to Baltic's guide (GMB 8.8) it is a rounded weighted average of the time-charter rates for Capesize (40 %), Panamax (30 %) and Supramax (30 %), multiplied by 0.1. So the BDI says nothing directly about tankers or container ships.
- BCI, BPI, BSI and BHSI are the indices for each bulk size.
- The BDTI (Baltic Dirty Tanker Index) covers crude and fuel oil and is built from eleven equally weighted routes. The BCTI (Baltic Clean Tanker Index) covers clean products and is built from five routes.
- BLNG and BLPG cover LNG and LPG carriers.
The rate values for each route are Baltic Exchange subscription data. Index levels are often reported in the news, but OESA does not show the rates, only the routes, weights and ships.
What drives rates
- Demand in tonne-miles. What ties up ships is cargo multiplied by distance. When ships have to take a longer route, for example around the Cape of Good Hope instead of through the Suez Canal, more ships are needed to move the same volume.
- Ship supply. The fleet grows with new ships from the yards and shrinks when old ships are scrapped. New ships take years to build, so supply cannot rise quickly when rates go up. That is why rates swing a lot.
- Speed and waiting time. Ships that sail slower to save fuel, or wait in queues at ports and canals, leave less capacity available.
- Seasons. For example grain seasons for bulk and winter gas demand for LNG carriers.
- Sanctions and regulations can split the fleet into separate markets, for example ships that carry sanctioned oil and ships that do not.
The routes on the globe
On the analysis page you can switch on the Freight routes and index weights layer. It shows the Baltic Exchange reference routes for tankers, gas carriers and dry bulk, how much each route counts in the indices and which ships the routes apply to. The sea lanes are computed illustrations, not navigation routes.
Sources
- Baltic Exchange, Guide to Market Benchmarks 8.8 (September 2026), appendix 2 – routes, cargo sizes, reference ships and index formulas
- Baltic Exchange: indices and market data
- Worldscale Association
- UNCTAD: Review of Maritime Transport
The guides are written by OESA students to explain concepts and how things fit together. They are not investment advice. Figures that are not definitions carry a source and a date; if you find an error, let us know at styret@oesa.no.