Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Vessel owners who waited for better markets turned out to be right. Europe and China returned from the August summer holiday to rebuild iron ore and steel stocks. This created an uptick in demand for raw materials and freight, and therefore higher ocean freight values. Summer is over and it’s time to get back to work.
This week’s market rally was led by a very strong Capesize market, however the market has also seen increased demand for coal and nickel ore that has supported the Panamax and Handymax markets.
Once again, the biggest increase in daily hire rates was in the Pacific. Vessel owners and operators are calling this move a market turnaround, expect things to improve from here and believe they will see better times in 2014 rather then having to wait until 2015 for improved profitability. Personally I’m still not convinced about this logic as I do not yet see that significant of an improvement in world economies ,and still see a large surplus of vessels in the market; especially in the Panamax and Capesize markets. I would like to believe the world economic picture is making a fast recovery, as it would greatly help my retirement account, but I’m not that optimistic yet. As always, time will tell. Let’s see how long the rally can last.
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 Thailand.
