Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: I’ve obviously been a bit conservative on my rate indications, thinking that vessel owners would strongly resist going much lower. However, I continue to see new freight fixtures at even lower rates than I expected – and so I will adjust things this week. The Baltic Panamax index continues to drop. I must assume that the market believes that vessel owners have not yet felt enough pain. This begs the same old question: how much further down can things go?
Somehow we have not hit bottom yet, but we must be close. Low fuel prices have stemmed a lot of the previous slow steaming practices and this of course has only resulted in better logistical efficiencies and a greater availability of ships. I guess the market must now go to levels that force owners to layup vessels in order to reduce the volume of available capacity. So – are we there yet?
Panamax rates from the U.S. Gulf to China are trading in two different route values, one for shipping via the Panama Canal and another for going around the Cape. Rates on this business can differ by $1.50 or so per ton depending on the cargo size and route; the Cape route is currently the cheaper option. Please note that since there was no report published last week the below rates represent a two-week market change.
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to South China:
The charts below represent year-to-date 2015 versus January-December 2014 annual totals for container shipments to Malaysia.
