Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Global ocean freight markets have supported a two-week rally in the Baltic freight indices.
This time there was fair support across the Capesize, Panamax and other Dry-Bulk sectors. In the last three weeks (just back to the beginning of the month) you will notice that the Baltic Panamax indices have risen by 47 percent in the Atlantic and by 42 percent in the Pacific. This is obviously a rather good jump for a previously sluggish and dull market. As is common, the physical voyage charter market has trailed the Baltic indices movement but it has gone up. I cannot detect any fundamental change occurring in these markets and therefore must conclude that this rally is temporary. Traders believe the increase in values is mostly a result of slightly improved grain business out of East Coast South America and “positional tightness” in the U.S. Gulf. As vessel operators continue to ballast over from the weaker Mediterranean market the U.S. Gulf market should loosen up.
Container freight for U.S. grain and oilseed commodities to Asia have remained depressed, but still attractive for U.S. Shippers and buyers. LA-Long Beach, CA to China freight is about $300-$325/TEU. (40 ft. container at 25 MT would equal $12.00-$13.00/MT or a 20 ft. unit at 18 MT would equal $16.00-$18.00/MT). Chicago to China = $1,100-$1,200/TEU. (40 ft. container at 25 MT would equal $44.00-$48.00/MT or a 20ft unit at 18 MT would equal $61.00-$66.66/MT).
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 Indonesia.
