Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: It has been another slow, but up and down week for the Baltic Dry-Bulk Indices and the physical freight markets. All-in-all things did not travel too far. It is still very difficult for the market to sustain any meaningful rally. The Dry-Bulk market is waiting for volume to pick up once the North American harvest gets underway in earnest. Container rates want to go up, need to go up, but again will most likely be able to do so only for a very limited period of time. We continue to see bigger soybean cargoes loaded out of the U.S. Gulf to China, but they still are not utilizing the new locks at the Panama Canal. U.S. railroads report that close to a record number of locomotives and rail equipment is idled awaiting a pickup in business.
Note that North African freight rates have been out of line and show a needed adjustment in this week’s report. Further, note that the cost of freight to North Africa from the U.S. Gulf and Argentina are very close to one another (within $1.50-2.00/MT).
The following is an interesting quote from John McCauley of Cargill to GLS Asia: “If the financial health of carriers was the only criteria we used, we wouldn’t be shipping anything.”
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.
