Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Today’s dry-bulk refrain is, “have we hit bottom yet”. Volatility has certainly been the operative word for dry-bulk markets. One month ago, vessel owners believed rates were shooting for the moon. After reaching 13-year highs on the Baltic exchange in late October, markets dropped to 5-month lows in the last 10 days. These are truly brutal markets. Markets are extremely sensitive to the ebb and flow of Chinese demand for all bulk commodities. As Chinese demand goes; so goes freight markets.
China is attempting to control high prices by cutting back on purchases. So far the strategy has been somewhat successful. But will they return to the buying table now that prices have dropped and inevitably push markets back up, or have they satisfied their hunger ?
Container shipping lines are ordering new vessels like there is no tomorrow; but tomorrow will come and we will find that there are too many container ships on the seas.