Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Global ocean freight markets bounced around this week but ended up doing little more than sailing in circles. Markets were a little weaker for the first three days of the week and on Thursday seemed to bounce a bit in an attempt to gain back a little of the lost ground. I guess that is all the excitement we can expect out of this type of market. As expected, the smaller size vessels weathered the market better than the Cape and Panamax sizes. There is additional talk of growing operational difficulties with financially troubled vessel owners, and shippers will have to be mindful of this. Chinese soybean buyers have shifted a good portion of their business to Brazil but all-in-all, and with the singular exception of Paranagua, logistics there seem to be moving fairly well. The added efficiencies of the new Northern Brazilian ports are greatly aiding in the smoother movement of soybeans out of Brazil. A number of Chinese soybean buyers I’ve spoken with say they are only covered for the next 75 days and that they have been bearish on prices and waiting on the market to fall. Now that they have been disappointed by this strategy we will have to see how fast they come in to cover. Comments by speakers at the JCI conference in Shanghai this week may help motivate them to action – at least mine might?
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 China.
