Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: It was an ugly week for vessel owners as dry-bulk ocean freight markets continued their downward slide. Paper index traders threw in the towel this week. Physical buyers have not been motivated to pay up and vessel owners are being forced to take the bids they can find. It is indeed a soft market.
Daily hire rates for Panamax vessels have dipped below $10,000/day. This is getting quite concerning for vessel owners and their banks as the anticipated 2019 market rally is not materializing. Facing serious cost increases relative to the 2020 lower CO2 emissions standards (IMO 2020), owners must now question their ability to say profitable and even afloat. The resulting reduction in new vessel orders has also put ship building yards in a very shaky financial situation. All hope rests on an improving global economy which has not yet shown expected growth rates.
The charts below represent 2018 annual totals versus 2017 annual totals for container shipments to Hong Kong.
