Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: From a vessel owner’s perspective, I guess you have to say it was a good run while it lasted. The multitude of shipping news sources that were welcoming in the long-awaited market turnaround have become rather silent this week. And, so has the market in general. The holiday season is upon us and is certainly adding to the reduction in market activity. However, the recent market pull-back is deeper than just the doldrums of the holiday season. Traders in the Baltic Freight Forward market got a bit over zealous in their hope for reaching a turning point in Dry-Bulk shipping. So, the realities of continued vessel oversupply have resurfaced and brought the market back into the real world.
Overall the shipping industry is doing what it needs to do. Vessel scrapping continues at a good pace and new-build orders are minimal. The Capesize and Panamax vessel age profile is now at seven years and the Handymax Dry-Bulk sector average age is at 10 years. As long as things keep moving in the right direction the market will gradually improve, but it will take more time and a true turnaround is most likely another year or two away. Please note that the Handymax Dry-Bulk market is holding up better than all others.
U.S. export grain demand from Asia and rail and ocean freight rate spread advantages are increasing vessel lineups in the PNW.
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.
