Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: What new can be said about these vessel markets? Not much. The Capesize market was mostly flat this week.
The Panamax sector saw a little better demand and slightly higher long-term time charter rates. But the Panamax voyage charter market is still not willing to pay up and is therefore mostly unchanged for the week. The news coming out of the big Shipping Norway conference mostly involves vessel owners stating the obvious “we got it wrong” and “we have to face the music”. Now we will see if they really mean it and stay away from ordering new ships.
With delivered PNW rail corn bid at +93 N and FOB vessel trading at about the same, or slightly lower, it looks as if we are trading negative fobbing margins out there for June-July. However negative rail car values of up to $350-$375 per car will add .08-.09 cent per bushel ($3.15-$3.54/MT) to this calculation. Add in some rumoredrail rate incentives and the fobbing margins in the PNW become attractively positive. So export corn and soybean business should continue to flow in that direction.
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 China.
