Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Global Dry-Bulk rates jumped up this week. For the moment, the market is not steaming in circles and instead has taken a new bullish direction. There is a lot of talk about a much firmer Atlantic market, but not much real explanation as to why. Over the past month Panamax owners have seen daily hire rates move from $6,000/day up to $9,000/day. They must be doing something right.
This bump up in Dry-Bulk rates will make containerized grain shipments more competitive to Asia and provide motivation for container shipping lines to maintain or even raise their rate structures.
If the market rally can be sustained for a while ship owners may even be able to make some payments on their outstanding loans. I’m sure that vessel owners will do all they can to take advantage of this rally and will be setting their offering prices even higher than what I have indicated as current market rates below. One charterer told me he had been offered as high as $36.00/MT on the U.S. Gulf to Japan route for December. He did not book that and will keep looking.
The North American grain harvest has helped support rates, but we are now entering the back side of the harvest and will have to track exports track over the coming quarter. Domestic rail and barge rates have dropped substantially over the past two weeks. China has started to offer corn to Korea at $7.00/MT discounts to all other origins.
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 Malaysia.
