Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting:It was not a pretty week for vessel owners and operators. The market fired a broadside and sank everything in sight. The Baltic Indices and physical rates took it hard and look like they are sitting on the bottom of the sea. It will take a bid to determine what can actually be booked but I’m sure that, for the most part, vessel owners will prefer to sit this storm out in port and not take to the sea. Those who are running on time charters will still need to run to get some return on their investment. Negotiations are going to be tricky.
I cannot find any new issues that caused this additional drop-off to occur. It just appears to be a continuation of the same old fundamental issues of over supply verses insufficient demand.
You will note that I changed the Japan and China rates to reflect the dramatic market adjustment this week, but I have not made as big of a change to most the other rates. This is simply because I’m truly not sure where to place them after such a major shift. It will take at least another week to sort this out better.
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 2014 annual totals versus year-to-date 2015 container shipments to Indonesia.
