Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: This week’s uptick in Capesize vessel paper markets and rates combined with good grain freight demand from the U.S. Gulf and East Coast-South America provided support and higher values in Dry-Bulk markets.
Some corn sales have been made from Brazil to East Coast-Mexico. These were concluded a few weeks ago and calculated on a wide corn basis spread U.S. Gulf vs. Santos, Brazil, and with ocean freight rates of $21-$22.00/MT to Veracruz – versus relative freight from the U.S. Gulf to Veracruz at $13.00/MT. The current corn Basis FOB Brazil is considerably higher today, and the ocean freight spreads are a bit wider, so we will have to see if these sales ship as originally intended or get swapped out for U.S. Gulf corn. Export traders are anticipating that container shipping lines will install a $100/TEU GRI in October.
The improved freight markets have motivated some vessel owners to step back into the new vessel ordering game. If this continues the 2020 Dry-Bulk fleet will start growing again and the markets will be forced to punish everyone in the industry. Someone please tell owners to keep their hands in the pockets and their wallets closed to protect their investments.
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to China:
The charts below represent YTD 2017 versus 2016 annual totals for container shipments to Indonesia.
