Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: The Baltic Panamax Ocean freight and physical markets fell back a little this week. I think it has mostly been a case of having gone up too far too fast over the last month.
The bigger news this week is, of course, is hurricane Harvey and the impact it is having on South Texas and the Texas ports. At this time, all Texas ports are closed until further notice. Ships are in the harbor but nothing is moving. It is not yet known when grain loading operations will resume. Aside from the physical damage that the flooding has caused around Houston and Corpus Christi, it is going to be a challenge for export employees to return to work – many without home to return to. The storm is now hitting New Orleans, LA.
Rail grain exports to and through Texas en-route to Mexico have also been severely impacted with large sections of track underwater. Of course, this means that there will be serious delays in loading vessels and executing on contracts. Grain buyers need to read their contract terms carefully and be ready to negotiate to protect their supply chains. As they say in the grain business: “Never let the chickens go hungry.”
Below is a recent history of freight values for Capesize vessels of iron ore from Western Australia to China:
The charts below represent YTD 2017 versus 2016 annual totals for container shipments to South Korea.
