Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: All-in-all ocean freight markets were pretty quiet this week. The Baltic indices did pick up a little but the physical markets hardly moved. The only market showing any improvement in cargo demand was the grain market out of the U.S. Gulf. Exporters and ship owners are hoping for a big harvest export program.
Current time charter rates for Panamax vessels is just over $5,500/day. If you look out one year forward the bid/offer is $6,500 vs. $7,500 in the Atlantic. The two-year time charter market is $7,250 vs. $8,250. So, there is some hope that things will gradually improve. You can buy a new build Panamax Dry-Bulk vessel for very close to $25 million (USD) or purchase a 5-year old used vessel that still has 20 more years of good use for about $14 million (USD). This tells you why shipyards are doing so poorly.
It is interesting to see this week’s freight fixture of a 66,000 MT soybean cargo from the U.S. Gulf to China via the Cape. This insinuates that, with cheap fuel, it is more economic to go all the way around the Cape vs. through the new expanded Panama Canal with its higher tolls.
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to China:
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to South China:
