Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: As the old saying goes, “what goes up, must come down.” Dry bulk markets were not kind to Capesize vessel owners this week as that sector witnessed an historic one-day decline on Thursday. Markets seem confused over the increases in Chinese imports in face of the subdued economy there. The question that therefore arises is, can a freight rally be sustained?
FFA paper markets look defensive at the moment. Physical Panamax markets are up slightly from last week but off their current highs for the week. Everyone is still wrestling with the low water situation at the Panama Canal and dry bulk vessel transits have dropped about 60 percent in the last two months. Since we are now entering the dry season in Panama, things do not have potential to improve much until April or May. Grain ships are now moving from the U.S. Gulf to Asia via the Suez Canal and Cape of Good Hope. Latin American shipments are routing via the Strait of Magellan.
