Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Dry-Bulk markets have changed/improved. I have to believe that the market has set a bottom and that the lows for the year have been established and are now behind us. Global Dry-Bulk markets hit bottom around February 1, 2016 and dragged anchor for most of February and March. In late March and early April things turned around a bit and provided vessel owners with a bounce in daily hire values. Since February 1:
- The Baltic Dry-Bulk Panamax Atlantic index has improved by 5,177 points (just about doubled);
- The Panamax index in the Pacific has jumped 3,018 points or 152 percent.
The only remaining question then becomes where do things go from here? Granted, we have seen considerable consolidation in the shipping industry, some vessel layups, slow steaming plus a lot of vessel sales and scrapping. But the world fleet remains in oversupply and the fundamental picture is not yet bullish. So, vessel owners should certainly take advantage of this rally and not get overconfident or adventurous. With thoughts of U.S. corn and HRW wheat exports to Brazil I’ve been asked to estimate the freight cost of a Handymax vessel from the U.S. Gulf to Northern Brazil; my estimate would be close to $15.50-$16.00/MT.
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to China:
The charts below represent year-to-date 2016 versus January-December 2015 annual totals for container shipments to Korea.
