Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Just when you think the market cannot go lower, it does. It seems we have not actually reached bottom yet and the market wishes to continue to inflict pain on vessel owners and operators. The Baltic Indices were down more than the physical markets.
Maybe this is what is needed to motivate vessels owners to do what must be done; stop orders for new builds and scrap any vessel over 23-25 years old. The downward market slope on global freight does, however, seem to be flattening out. Regardless, importers of grain and oil seeds are certainly benefiting from the lower commodity prices and cheap dry-bulk ocean freight. Panamax freight from the U.S. East Coast (Norfolk, VA) is trading to China at a $4.00/MT discount to the US Gulf. The Handysize freight market from Norfolk, VA to the Caribbean and North Africa has been very competitive versus the US Gulf.
Container freight rates have not come down, and have even increased slightly, due to the West Coast’s labor issues. This unfortunate problem is likely to continue to haunt everyone for months to come.
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to South China:
The charts below represent January-December 2014 annual totals versus year-to-date 2015 container shipments to Japan.
