Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Global freight markets remain soft with little hope for a meaningful turnaround any time soon. It is simply more of the same old story: too many ships and not enough cargo. Even the North American fall grain harvest did not bring enough additional demand to soak up the surplus of freight. The only important question left is how long will this last?
Unfortunately for vessel owners there does not seem to be reason to expect things to change until 2017, and this is only if the world economy picks up speed. Otherwise it will be a longer and more painful haul for anyone invested in any type of ocean freight. So, the watch goes on to see who can hold their financial breath the longest and who will be next to file for bankruptcy protection. It is not a pretty picture in either dry-bulk or container freight markets. Hold onto your hats, we will see even rougher sailing ahead.
Note: Though the corn and soybean market spreads along with the ocean freight spreads have favored the PNW over the past few months, I don’t see the U.S. PNW gaining any market share against the Gulf.
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to China:
The charts below represent year-to-date 2015 versus January-December 2014 annual totals for container shipments to Indonesia.
