Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: We are quickly approaching the Lunar New Year, February 8-13, 2016, and global freight markets are expected to get even quieter during the holiday. I do not see anyone rushing to cover urgent needs so things will probably remain rather flat. It does, however, seem like we have finally found bottom. The Capesize market between Western Australia has resisted going lower than the $2.85 mark and the Baltic Panamax Index showed a very slight uptick this week. Capesize vessels are still getting $2,800- $3,000/day and say they need close to $6,000/day to break even. Panamax Dry-Bulk vessels are trading in the $2,300-$2,500/day range. Of course, charter party demurrage rates are running much higher than this.
With a grim market outlook for the next 9-12 months it will be interesting to see how long it takes some vessel owners, or their financial backers, to through in the towel.
Due to high water and too much silting, the Associated Bar Pilots of the Port of New Orleans (Mississippi River port of NOLA) have been forced to reduce their maximum draft recommendation at the South West Pass to 41 feet from 47 feet. This does not so much affect U.S. Gulf shipments to Asia that transit the Panama Canal because the current draft restriction there is 39.6 feet. But, it will have an impact on grain cargoes going out through the Atlantic or going to Asia via the Cape. As a general rule on Panamax vessels you can calculate about 2,000 MT less cargo per vessel for every foot of draft reduction.
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 Japan.
