Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: It appears the recent Baltic Index and physical market rally in the Dry-Bulk sector may have topped out and now is in a bit of a correction mode, at least for the moment. Some of the bloom may be coming off the rose. I think it is important for vessel owners to understand that things do not go up forever, especially when the market remains in an oversupply situation. Sellers need to simply take advantage of any rallies they get.
Vessel owners are doing their best not to engage in new build orders and the suffering ship yards are trying to lure them back with big discounts. I hope owners do not take the bait. Vessel scrapping continues at a good pace and we have even seen four to six 2002-built (14-year old) Post Panamax container ships (5,447 TEU each) go to the scrap yard over the past 6 months.
I’ve gotten some outside input on my estimate of corn and wheat rates from the U.S. Gulf to Northern Brazil. Depending on the vessel size and discharge guarantee freight brokers have given me quotes of between $13 and 17.00/MT. So my guess of $15-16.00/MT was not far off. This movement is most likely to ship in a geared Handymax vessel.
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 Malaysia.
