Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: China is on holiday this week and things are fairly quiet. Global ocean freight markets continue to struggle. Vessel owners are desperately hoping for a turnaround that does not appear to be imminent. Freight markets are definitely showing a carry, or contango situation, with deferred positions trading at a premium to today’s values. Actually this is just a situation of vessel owners not being willing to sell forward positions at today’s prices. However, they will end up having to accept what the market will pay when next month arrives and becomes the present. Buyers, of course, are not seeing any reason to pay up and seem very content to just wait and see what happens.
You will notice that grain vessel lineups at the U.S. Gulf are starting to build as the fall harvest progresses. PNW vessel lineups, however, have dropped back while the number of sorghum vessels loading in the Texas Gulf has declined substantially from previous weeks. The drop in rail car values in the secondary rail car market is a strong indicator that farmers are holding a lot of their production and not marketing very much from the combine.
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 2014 annual totals versus year-to-date 2015 container shipments to Vietnam.
