Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting:As we enter the last quarter of 2014, the shipping industry is anxiously asking itself if things have finally turned the corner. Rates seem to have at least stabilized and even shown some improvement over the last month. The strong carry, or Contango, in the markets certainly indicates that everyone is optimistic about what the last months of 2014 and the next year will produce. The spot market continues to be a buyers’ market but it will take considerably more money to wrestle a ship away from an owner for the Oct.-Nov.-Dec. positions. The Panamax sector is currently leading the way up. The Capesize markets are trailing the rest, but even they are showing a wide spread between the $16,918 spot market and the $24,500 Q4 market. Markets in the Pacific are showing the best recovery, but then again they suffered the most over the past quarter.
I am not thinking that ocean freight markets are going to become wildly bullish but I do think shippers and receivers are going to have to adjust to paying a bit more as we move forward. The containerized grain freight markets will likely take longer to recover and improve. This will cause the spreads between Dry-Bulk and container freight to widen in the favor of containerized grain shipments.
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 January-August 2014 container shipments for Japan.
