There’s an ETF for That? Shipping & Freight

Breakwave Tanker Shipping ETF

BWET

-6.03%

The first ETF worth looking at is BWET, which focuses specifically on crude oil tanker freight rates. While some readers may have traded shipping stocks such as ZIM Integrated Shipping Services, BWET is fundamentally a very different type of product.

BWET does not hold shipping companies. Instead, it holds positions in freight futures tied to the cost of transporting crude oil across global shipping routes.

The ETF tracks the future price of crude oil shipping. Normally, accessing these markets requires a margin account and significant capital to trade freight derivatives directly. By packaging them inside an ETF, BWET makes this exposure accessible to ordinary investors.

BWET is designed to track the Breakwave Tanker Futures Index. About 90% of the portfolio is allocated to very large crude carrier (VLCC) freight futures. VLCCs are the largest tankers in operation and are commonly used to move crude oil from the Middle East and the Americas to Asia.

The remaining 10% of the portfolio consists of Suezmax tanker freight futures. These ships are roughly half the size of VLCCs and are commonly used on Atlantic routes. They are also notable because they are the largest tankers capable of transiting the Suez Canal.

The portfolio itself is laddered across futures contracts one to six months forward, with a weighted average expiration of roughly 60 to 90 days. If you look at the holdings, you might see something like a position labeled TD3CFFA207KT Middle East Gulf to China USD/MTM March 26.

In plain language, this refers to a forward freight agreement tied to the TD3C route, which tracks the cost of shipping crude oil on a VLCC from the Middle East Gulf to China. Traders use these contracts to hedge or speculate on future tanker rates along one of the world’s busiest crude shipping corridors.

Because it is tied directly to freight futures, BWET is an extremely volatile ETF. All else being equal, it tends to perform well when tanker demand surges, when oil trade flows increase, or when shipping routes become disrupted and freight rates spike.

Unsurprisingly, year-to-date as of February 28, 2026, BWET is up 198.96% on a net asset value basis. Geopolitical disruptions such as the current conflict in the Middle East tend to be supportive for tanker rates because they increase shipping risk, lengthen routes, and tighten available vessel supply.

That said, the same dynamics can reverse quickly. BWET can surprise to the downside when oil demand weakens, when shipping bottlenecks ease, or when geopolitical tensions subside and trade routes normalize. Freight markets are notoriously cyclical and prone to sharp reversals.

There are also a few structural considerations investors should be aware of. First, the ETF is expensive. BWET currently carries a 3.5% expense ratio. That figure already reflects fee waivers from Breakwave and the sponsor agreeing to absorb certain expenses to cap costs at that level. After December 31, 2026, that cap may be removed, which means the total cost of ownership could rise further.

Second, BWET issues a Schedule K-1 rather than the standard Form 1099-DIV. This is because the fund is structured as a commodity pool partnership. Instead of reporting simple dividend income, investors receive a K-1 that details their share of the fund’s gains and losses from the underlying futures positions. For the 2025 tax year, investors should expect to receive their K-1 by the end of 2026.

Breakwave Dry Bulk Shipping ETF

BDRY

+0.44%

The counterpart to BWET is BDRY, which focuses on dry bulk shipping. While BWET tracks tanker freight rates tied to crude oil transport, BDRY targets the cost of shipping bulk commodities such as iron ore, coal, grains, and other raw materials.

Like BWET, BDRY does not hold shipping companies. Instead, it gains exposure through freight futures contracts that track the cost of chartering dry bulk vessels across major global routes. The structure is similar, but the composition of the underlying contracts differs to reflect the dry bulk shipping market.

Roughly 50% of the portfolio is allocated to Capesize 5TC futures. Capesize vessels are the largest standard dry bulk carriers and are primarily used for transporting iron ore along long-haul routes.

 Another 40% is allocated to Panamax 4TC contracts. Panamax vessels represent the largest ships able to transit the Panama Canal, making them a key workhorse for grain and coal shipments.

The remaining 10% is invested in Supermax 10TC contracts. These are medium-sized vessels equipped with onboard cranes, which allows them to load and unload cargo in ports that lack infrastructure.

Similar to BWET, the portfolio is laddered across one- to six-month freight futures, with a weighted average maturity of roughly 60 to 70 days.

Performance this year illustrates how different these markets can behave. BDRY has risen a strong 38.81% year-to-date, but that pales in comparison to the explosive rally in BWET.

The reason comes down to geography and cargo flows. Oil tankers are heavily exposed to routes that pass through the Strait of Hormuz, making them extremely sensitive to disruptions in the Persian Gulf.

Dry bulk vessels, by contrast, are often routed along longer global commodity corridors. Much of the trade runs from exporters such as the United States, Brazil, and Australia toward major importers like China, India, and parts of Europe.

In the case of Middle Eastern instability, many ships simply reroute around the Cape of Good Hope at the southern tip of Africa rather than transiting sensitive chokepoints. Because of that flexibility, dry bulk freight rates are less directly exposed to geopolitical tensions in the Gulf.

If your thesis centers specifically on disruptions to oil shipping routes, BDRY will likely be less sensitive than BWET, and the performance gap so far this year reflects that reality.

That said, BDRY remains extremely volatile. Since its inception on March 22, 2018, the ETF would have produced a cumulative loss of 51.46%. Freight markets are notoriously cyclical, swinging sharply with global trade volumes, commodity demand, and vessel supply.

Investors should also keep the structural considerations in mind. BDRY carries the same 3.5% expense ratio as BWET and also issues a Schedule K-1 instead of a standard Form 1099-DIV.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.