Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting:This week ocean freight rates appear to have topped out as the rally ran out of fuel and things sat back a bit. There is, however, getting to be more trade talk about Q4 2014 being the turnaround point for Dry-Bulk ocean freight rates. And many believe that, from a vessel owner’s perspective, 2015 will bring much better rates. It may be a lot of wishful thinking?
If we look back to the start of 2014 we see that Panamax rates from the U.S. Gulf to Japan began the year at about $58.00/MT and then slid to a low of around $42.00/MT before clawing back up to the current value of $46.00/MT. So, we did not experience all that much volatility during the past year and there is still considerable distance to cover just to get rates back close to where we started things in January. In that we still have a vessel oversupply situation and the world economy remains shaky, I’m not expecting to see a big rate jump soon. I do not believe that rates will be able to fully recover back to Q1 2014 levels in Q1 2015. Rates will most likely bounce around through the end of the North American grain harvest and then have to look for a new demand element to keep things buoyed.
On a different note, it looks like U.S. exporters are making very good FOB-ing margins at the Gulf with corn and soybean margins at 30 cents per bushel ($11.80/MT-plus), and sorghum margins at over $1.00 per bushel ($40.00/MT) or more.
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 year-to-date 2014 container shipments to Indonesia.
