Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: It has been an interesting week, but this week’s news was not about the Dry-Bulk market as it really did not provide any excitement. The big new was in the container shipping market with the announcement that Korean shipping line Hanjin (the world’s 6th largest container shipping line) was going into liquidation. This will cause considerable problems for those who have loaded containers on Hanjin vessels; due to alliance agreements there are other containers moving on Hanjin vessels as well. Today I spoke with a U.S. grain shipper who has Evergreen containers on Hanjin ships and cannot get access to them. This is going to cause many sleepless nights for many shippers and receivers. The resulting turbulence will likely cause some increases in shipping rates by the stronger lines.
It should be noted that we are currently at historically low container shipping rates. Container rates from the U.S East Coast to Taiwan have been reported at levels as low as $200-$250/TEU. Container rates from other origins are also at historical low levels. This has motivated Taiwanese soybean buyers to shift the majority of their purchases from Dry-Bulk to container. So, it is a real battle out there and this is creating some serious indigestion on all sides of the freight business.
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.
