Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Every day this week I thought we were going to bottom out, but the Panamax market just went lower and lower. Even being the bear that I’ve been, I have to think we must be touching bottom. I’ll bet $1.00 that we are up a little next week. The Capesize market seems to have stabilized. Also note that the market is at a good carry, meaning that vessel operators want $2-$4 /MT more for August-September over July. For the year, BIMCO estimates dry-bulk fleet growth will reach 52 million DWT of new deliveries. Thus, the fleet will not shrink this year, but will actually grow by 5.3 percent. Just when you thought it safe to go back into the water…
The new vessel order book holds 1,989 ships (163.4 million DWT) and is heavily loaded on the Panamax side. So far, only 109 ships (6.6 million DWT) have gone to demolition. The Panamax segment is setting a new fleet size record every day, and is currently growing at 8.7 percent year-on-year and stands at 191 million DWT. According to BIMCO, at this rate, the 200 million DWT fleet size threshold is likely to be reached before year’s end. Capes are now getting $14,100/day and Panamax vessels about $5,100/day on long hauls. Some Panamax vessels are going out on short distance spot charters for no income other than fuel cost and others are already laying-up.
For those watching world crop weather – we went from a strong El Nino in 2009-2010 to a strong La Nina in 2010-2011, then a brief neutral period was followed by a moderate La Nina in 2011-2012. This year we have a 70 percent chance of experiencing an El Nino event in July-August and an 80 percent chance for the September-October period.
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 2013 annual totals versus January-May 2014 container shipments for Indonesia.
