Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: Dry-Bulk freight markets continue to be characterized as “dull and uneventful”. Cargo business from the Black Sea has slowed and the oversupply of vessels there are looking for work. Some have even looked to ship wheat to the U.S. but, despite freight at $24.00-$25.00/MT, local FOB values will not allow it to pencil out.
For the moment, most freight values are unchanged from last week, but dull markets are not bullish and vessel owners will likely have to hit the bids as they slip back. Vessel owners have been hoping for a historical fourth quarter market rally but are now fearing markets could flatten out and not improve until 2021.
Container markets have seen an uptick in cargo demand but must also be wary of the potential for laid up capacity coming back on stream. Back in March and April, 25 percent of Transpacific container capacity was taken off-line. Ten percent is of it now back at work. It will be a delicate balancing act to maintain rates.
