Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: It turned out to be an up market at the end of the week. Ocean freight markets showed a little more buying interest at week’s end as Chinese purchases of iron ore cargoes picked up. Players in the Baltic paper market took this as a sign of recovery and jumped on the band wagon.
Most of the new price support showed up in the U.S. PNW/Pacific market (due to the continued loading delays and vessel backups) and in the East Coast South American markets as the soybean harvest and shipping season gains steam down there. More vessels are ballasting to South America to get in line. Vessel lineup in the PNW, which increased to more than 83 ships last week, is now down to about 65 (half of which are wheat). Last week I estimated FOB vessel corn values from the PNW at +1.40 H and thought I was aiming high; then a spot shuttle train traded at +2.05 H delivered PNW. This week I am hearing a corn shuttle market closer to +1.80 H. I will not try to guess the FOB vessel value for March. Rail logistics, however, are slowly improving and will take another four weeks to get back to a level of normalcy – providing Mother Nature doesn’t throw a curve ball at us.
I heard that the BNSF delivered about 18 shuttle trains into PNW export facilities on Monday (a record number) and 14 trains on Tuesday. Looks like they will be trying to get up to an average of 11-12 train deliveries per day as we move forward. So, things are gradually improving. Fingers crossed.
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to China:
The charts below represent January-December 2016 annual totals versus January-December 2015 annual totals for container shipments to Taiwan.
