Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: It appears the dry-bulk market has bottomed out, at least for the moment. Is it a “Dead Cat Bounce” or is the worst now behind us? Please keep in mind that the freight market is at a substantial carry going forward. Vessel owners are hopeful that things will improve once the Lunar New Year holiday week concludes. But, in truth, the market has more serious issues than just a brief holiday lull. Rates have been going down for the past three months. There remain structural issues regarding vessel supply and cargo demand in a global economy that is not expanding to the degree anticipated. We still need to curtail new vessel orders and economically encourage more vessel scrapping – and this will be painful to accomplish.
If you think about the consequences of this situation, you will come to the realization that this is not a good scenario for the shipbuilding industry and the governments that depend on such for employment and foreign exchange. However, this industry will not go down without a fight. So, we truly have two strong forces with conflicting needs. We must expect further consolidation within the dry-bulk sector, but this will not solve the problem of a global fleet that is bigger than global cargo demand. China, where are you?
