Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Freight futures players have done a good job of rallying the Baltic freight indices this week and physical freight markets have grudgingly followed. The Baltic Dry-Bulk Panamax index jumped 15 percent this week and moved from 673 to 905, an increase of 232 points or 34 percent since August 1. For the most part physical rates have moved up by about 12 percent over the same period. The recent price run up has given vessel owners and operators cause for greater optimism. I do not, however, believe this is a sign of a true market turnaround. I do believe Dry-Bulk markets bottomed out in February 2016, and grain container markets in mid-summer, but I am not yet convinced that we are at a point that justifies significantly higher rates. As mentioned previously, we still have a large imbalance in vessel supply verses cargo demand. The North American fall grain harvest has contributed to improved vessel demand. This demand pull will likely continue through December-January.
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 2016 versus January-December 2015 annual totals for container shipments to China.
