Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting:
The ocean freight rally continues. The Capesize vessel market remains the leader of the pack. As usual, it is improved demand for iron ore, coal and metals that is feeding the market demand. But this leads us to the question of whether this increase in demand for freight is a sign of a true market economic recovery, or is it a bit of a temporary aberration? As mentioned previously, I’m not yet convinced that the world economic situation has truly changed dramatically for the better. I’m left wondering if some of this demand increase isn’t a response to the turmoil in the Mid-East and a degree of stock building for safety reasons by the Chinese?
We have witnessed some “splitting” of Capesize cargoes (the spread between daily hire rates for Capesize vessels at up to $27,036/day verses Panamax vessels at $13,000/day has caused some Capes charters to reach down in size and charter 2 Panamax vessels), which of course has helped to support Panamax rates.
Anticipation of a good North American grain harvest and increased grain exports is also adding to market optimism. Once again, the biggest increase in daily hire rates was in the Pacific. The labor negotiations/dispute at some PNW export grain facilities continues to heat up, and some unloading and loading problems are beginning to surface. Export facilities are open and working, but the union is applying more pressure and trouble tactics as we approach the fall harvest period. We will need to see what develops.
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 2011 and January-December 2012 annual totals versus January-June 2013 year-to-date container shipments for Veitnam.
