Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: World freight markets are not giving me much to write about. For the most part, things are steaming in circles and not going very far. It seems we have reached a point where no one wants to sell at lower levels while at the same time there is no motivation for buyers of freight to pay up. So, we’ve seen rates go up $0.50/MT one week and back down the same amount the next. The only market that saw some support this week was in the Capesize sector.
The fact that any true turn around in rates may take a year or two (rather a month or two) seems to be sinking into the heads of vessel owners and their bankers. The new order book for vessels has dropped to almost nothing (which is what is needed) and a number of orders for new dry-bulk vessels have been changed over to tanker vessel orders. So the market is finally reacting in the proper way.
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to South China:
The charts below represent January-December 2014 annual totals versus year-to-date 2015 container shipments to Hong Kong.
