Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: I’ve heard it said that “If freight markets are to rally it will have to be led by the Capes,” and that is certainly what happened this week. Improved Chinese demand for raw materials ahead of the Dragon Boat Festival holiday (which lasts one week) moved the Capesize markets higher and helped to pull most everything else up with it. I have to think that this move is more temporary than an indication that we are at a true turnaround point for the global freight markets. A shipping expert with a maritime consultancy said at the Coaltrans Asia conference in Bali Tuesday that “a reduction of an estimated 30 percent of excess tonnage supply is needed before the dry freight market can be turned around.” So, we probably have some time to go before anyone can get really excited about a bull market in global Dry-Bulk or containerized shipping rates.
I don’t understand, and so someone will have to explain it to me: why are the Handymax and Supramax vessels getting $14,000/day on the USG to Central America route while everyone else is getting only $5-6,000/day hire? You would think that the world fleet should rush to this business, and then things would adjust.
On the bright side of the demand picture I do see that North African countries are coming back into our market for U.S. corn. I see U.S. corn shipments going to Algeria, Morocco, Egypt and Saudi Arabia. This means that Black Sea Corn is in limited supply.
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.
