Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: This is certainly not the way vessel owners expected early 2022 markets to play out. The Capesize index has lost 90% of its value since last October as slack cargo demand and nervous FFA paper traders are not supporting freight markets. Panamax and Supramax markets are, of course, following the Capesize sector’s lead.
Current predictions are that Russia will invade Ukraine and that serious sanctions will be applied against Russia. If this occurs, it would be bullish crude oil, wheat, and oilseed prices and would likely cause Black Sea-supplied commodities to be shipped from other, more distant origins. In turn, this would be bearish Black Sea freight and friendly for longer haul routes. I presume there are now big “war risk” insurance policies being imposed on Black Sea shipments, but I don’t know exact premium levels.
Container logistics remain a mess and will likely remain so through the middle of 2022.
