Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: There was continued price support in global freight markets early this week as the eight-week rally attempted to continue its run. However, the daily increases in the Baltic indices became smaller as the week progressed and by Friday the market took back most of the week’s gains. It appears that the upswing is running out of steam. The primary factor in this recent rally has been the seasonal dislocation between demand and supply, primarily in the Atlantic.
It is also theorized that, with the previous long term slide in freight values, the big grain companies did not renew many of their annual time charters and therefore have less coverage than in past years. This may be one of the reasons we have seen so many grain buyers simultaneously entering the market and pushing it up.
It is also interesting to note that, in the first half of 2015 we saw a total of 19.6 million dwt worth of bulk carriers scrapped. When compared to the rate of new buildings this equates to a net fleet growth of just 1 percent. It looks like vessel owners have gotten the message and maybe we are starting to move towards a rebalancing? However, it is still going to be a long process.
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 Thailand.
