Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting:Are world ocean freight markets getting better or worse? It all depends on your perspective. Those needing to purchase freight are surely happy to see rates dropping. The current rate structure is a pleasant surprise to those who were expecting to pay more due to an anticipated Q4 2014 market rally. That market rally did not happen and vessel owners and operators are feeling the effects. From an owner’s perspective, shipping economics are not looking positive.
Freight markets started out the year of 2014 with a Baltic BPI at 1780, Gulf to China Panamax rates at 57.00/MT and PNW rates to China at 28.50/MT.
Today the BPI is 907 (down 851 points or 49 percent). US Gulf physical rates to China are down $18.50/MT or 32 percent with PNW rates down by $8.00/MT or 28 percent from the beginning of the year. So, 2014 certainly was not the turnaround year many anticipated, and the first quarter of 2015 may not show any better results. So slow steaming will continue to be the order from the bridge and consolidation will likely be the news out of 2015.
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 2013 annual totals versus year-to-date 2014 container shipments to Thailand.
