Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Ocean freight news articles are full of stories describing how 2014 will be the big turnaround year for freight markets. I’m guessing we have indeed seen the bottom and that things should gradually improve. However, it is difficult for me to envision a “Big” turnaround and smoother sailing for vessel owners as we move through 2014. I’m still of the opinion that it will be a bumpy year. The biggest question continues to be how fast will the world economy improve and soak up the excess vessel supply? The next seven-to-10 days should remain fairly quiet as we pass through the Lunar New Year holiday period in Asia. Then we will have to see how hungry the market is for freight when the holiday celebrations are over.
The one bright spot on the demand side will be the advent of the South American Corn and Soybean shipping season. We already see 27+ vessels in line at Brazilian ports waiting for the harvest. I’m leaving most rates unchanged this week due to the lack of activity.
According to SSY fleet data just over 60.0 Mdwt of dry-bulk vessel new buildings were delivered in 2013. This is the lowest annual total since 2009 and was down by almost 40 percent from 2012’s record. But this is, of course what is supposed to occur after going through a major drop in vessel values. The total dry bulk order book at the end of 2013 rose to a 16-month high of 133.3 Mdwt. The job of the market is to discourage another major new build program for the next few years.
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 2012 and January-December 2013 annual totals versus January 2014 year-to-date container shipments for China.
