Ocean Freight Markets and Spreads
Ocean Freight Comments
There has been no movement in negotiations of the labor contract between the International Longshore Association and the U.S. Maritime Alliance. However, earlier this week, President-elect Trump spoke up on behalf of the ILA indicating he thought automation was not important to consider. The key sticking point has been around automation of docks and at terminal operations. The contract is set to expire January 15, 2025.
Attacks on vessels plying the Red Sea and Arabian Peninsula by the Houthi terrorists have been quiet for several weeks. Despite the relative peace, vessel owners and operators are choosing to bypass those areas sailing between Europe and the Mediterranean and Asia. Instead, they are using the longer route around the Cape of Good Hope that adds days and costs to the journey.
The Baltic Dry Index dropped further this week, losing 7% or 78 points to an index of 1,028. This is the lowest level the BDI has been at since July 2023. The BCI dropped 140 points or 10% for the week to an index of 1,237. The BDI is greatly influenced by the BCI. The Baltic Panamax Index turned lower as well, down 9% or 96 points to an index of 957 and the first time dropping below 1,000 since July 2023.
Voyage rates were lower during the past week. To Japan from the U.S. Gulf, the rate ended the week down $0.90 per metric ton or 2% lower to $43.21 per metric ton. From the Pacific Northwest to Japan the rate was down 6% or $1.01 per metric ton to $16.31 per metric ton. The spread on these routes was nearly unchanged, widening $0.11 per metric ton to $26.90 per metric ton. Both routes are quoted using vessels loaded with 55,000 metric tons.
To China the rate from the U.S. Gulf ended the week 3% or $1.22 per metric ton lower to $37.47. From the PNW the rate to China was down 2% or $0.49 per metric ton to $20.68. The spread on this route narrowed by 4% or $0.73 per metric ton to $16.79 per metric ton. Both routes to China are quoted using vessels loaded with 66,000 metric tons.