Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Given the big holiday week in Asia, things have been pretty quiet. And, as is common in quiet markets, rates have slipped lower. There is a lot of talk/questions in the market regarding the potential economic impact of the new policies the new U.S. President may enact. For now, the answer is simply unknown and the uncertainty that brings is not bullish on international markets – nor on any type of ocean freight rate projections.
I’m currently in Panama meeting with the management of the Panama Canal Authority. Our discussions revolve around the new canal lock, canal capacity and the future outlook for various types of vessel traffic through the canal. At the moment, the Canal Authority is only locking through 6 vessels per day (3 ships in each direction) via the new lock with a draft of 45 feet (going to 46 feet). Only 4 dry-bulk carriers have used the new lock since it was opened (all 4 were coal vessels) and the outlook does not seem to favor dry-bulk versus container and LNG vessels. A big container ship will pay tolls of $800,000 to use the new lock. LNG will pay $400,000 and Neo-Panamax dry-bulk vessels will pay $280,000. You do the math on what type of vessel produces the best revenue per transit.
On the container side of the markets, I saw a news article that stated that two thirds of the Hanjin Box ships remain unemployed and that 7 percent of the total box ship fleet was idled with rates still under overcapacity pressure.
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 2016 annual totals versus January-December 2015 annual totals for container shipments to Vietnam.
