Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Markets are proving that “what goes up, must come down”. This year, dry-bulk markets have provided something for everyone, but timing has been everything. After seeing daily hire rates reach 13-year highs in early October, there has been a dramatic selloff. Paper traders decided it was time to take profits and physical markets have been exhibiting a seasonal slowdown in cargo demand as December and Q1 2022 draw near.
Previous exuberance and bullish expectations have softened, and many are now projecting a return to more traditional seasonal market patterns heading into 2022. This would suggest less volatility and less excitement in 2022, but one cannot forget that new vessel additions to the fleet will not keep pace with expected cargo growth over the next three years. Therefore, considerable price uncertainty remains.
Container rates have dropped slightly, but the backlog of ships waiting off the U.S. West Coast continues and logistics remain a mess.