Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: The Capesize Dry-Bulk Index and physical markets have truly enjoyed an impressive rally, and the Panamax and other freight markets were pulled up with it. The term I hear a lot is “market sentiment is positive.” This is true – it is now very optimistic and even bullish.
Vessel owners and freight analysts now believe that we have turned the corner and largely rebalanced the fleet size versus cargo demand. I’m not sure that the first quarter of 2018 will see higher values, but it does appear that 2018 daily hire rates will be higher than in 2017. Hang on to your hats and be prepared to pay more.
The 2020 CO2 emissions regulations and their impact on the type of fuel vessels will burn, and the actions owners will have to take to comply, will also have a dramatic influence on vessel scrapping and freight rates as we move forward. Dry-Bulk rate increases are certainly outpacing container grain rates, and we will have to see how that potentially changes the percentage of grain moved for export in containers.
On the container side of things: buyers in the Asian Sub-Continent are experiencing considerably longer delivery/transit times due to the consolidation that has occurred in the shipping industry and the change in Asian transshipment ports.
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 Vietnam.
