Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: This week, the Baltic Index traders tried to claw back some of last week’s losses; business from the U.S. Gulf and Black Sea regions is providing support for the Panamax market. Fall harvest is getting close. For now, rates are just moving back and forth in approximately a $1.00/MT range.
As mentioned last week, it is interesting to see 9-10 bigger vessels of 81-91,000 DWT (70-78,000 MT of cargo) in the U.S. Gulf waiting to load soybeans for China. These vessels could, but most likely will not, be going through the new Panama Canal locks due to the cost of tolls. With cheap freight rates and low fuel costs the vessels that can fit through the old locks will do so. Those that cannot will be going all the way around the Cape to China. To date, no Dry-Bulk cargo vessels have used the new Panama locks. It has been container, LNG and tanker vessels that have been utilizing the new expanded lock system. It just isn’t economical for Dry-Bulk vessels to use the new locks in this market. For example, a Supramax (55,000 DWT) vessel is required to pay 9 percent more than the previous toll to transit the Panamax locks and 49 percent more than the previous toll to transit the Neopanamax locks.
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 Hong Kong.
