Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Ocean freight traders seems to be returning to the job slowly after the Lunar New Year holiday. This week has been mostly quiet with little trading. This light volume of activity of course has not provided very much support for the markets, but rates do seem to be up just a little. Most of the related news so far has been about the poor financial conditions at both dry-bulk and container shipping companies.
Updates derived from my trip to the Panama Canal Authority: The new lock is working with a reduced draft of 45 feet, but there is hope to go to 46 feet in a couple of weeks. It will probably be later this year before they get to a 47-foot draft and next year before they get to 50 feet. The big container vessels pay $800,000-$900,000 in transit tolls. LNG vessels pay about $400,000, and a Neo-Panamax dry-bulk vessel would pay about $280,000 in tolls.
In that the new canal is currently working/locking through just six vessels per day at the new lock, they have created more demand for the new lock than they have capacity. Given the difference in toll structures this has to create an interesting dilemma for a Sovereign Service company. Their objective is to work their way up to eight transits per day and then eventually up to 10 or maybe 11 per day by next year. Note that there is an existing plot of land that has been designated for future expansion to another lock set if needed at a later time.
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 2016 annual totals versus January-December 2015 annual totals for container shipments to the Philippines.
