Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: It was another up week in global ocean freight markets. Those who believe it is turnaround time seem to have the upper hand at the moment. It will be interesting to see just how far they can really push things.
Looking back, however, it is quite impressive how much the markets have moved/recovered. One year ago (February 29, 2016) the Baltic Panamax index stood at a low of 282. Today it closed at 1,041. That is an improvement of 759 points or 369 percent (of course it came up from a very low level). Physical rates are obviously not up that much, but this is proof that the markets have certainly bottomed and turned the corner. It is also a good indication of just how enthusiastic and anxious the paper players are. Physical rates have risen about $12.50 (U.S. Gulf to China) and about $6.50/MT (PNW to China) over the past year.
The grain vessel lineup in the PNW dropped this week to about 61 ships waiting, a small improvement. BNSF rail deliveries of grains also continues to improve with deliveries becoming more regular. It looks like the worst is behind us. Now, it will just be a case of having to sort out all the contract disputes.
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 Hong Kong.
