Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Last week’s attempt to rally ocean freight values is fading. The Dry-Bulk Capesize market looks to be in even worse shape than before with west Australia iron ore to China trading down to $2.75/MT. Panamax rates in the grain trade look to be moving mostly sideways and struggling to maintain stability. Smaller vessels are holding up a little better in this market.
With weak export volumes and slow farmer grain movement, U.S. Export Fobbing (loading) margins (with the exception of grain sorghum) are terrible; in some cases, near zero. With the continued weakness in global stock markets and slowdown in demand for raw materials, machinery, and maybe even consumer goods, we are not building sufficient new cargo demand. I don’t believe dry-bulk ocean freight rates can go much lower but that doesn’t mean that we are out of the freight crisis and that more drama will not occur; it will. It is going to be a very rocky 2016 – hold on to your hats.
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to China:
The charts below represent year-to-date 2016 versus January-December 2015 annual totals for container shipments to the Philippines.
