Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: I know I should not be so amazed by how many hundreds of points the Baltic Dry-Bulk indices move per day and per week, but I am. This is not the corn or soybean market where weather and other ever-changing factors impact things on a daily basis. The fundamentals in the ocean freight markets do not change in short periods of time. So, what the heck creates these significant daily moves? The obvious answer is the speculative paper trading that occurs; for some reason, trader optimism springs eternal. I say take your profits and run, but this is why physical markets do not move in lockstep with the Baltic indices and why charterers of physical vessels must be wary of the Baltic market movements.
In the end things will balance out, but it is the volatility that causes heartburn. What goes up, must come down. This week was a quiet week in freight markets and therefore a bit of a down market. East Coast-South American demand was lacking. U.S. Gulf grain cargo demand was not robust. On the container market side, from Alphaliner’s Hua Joo Tan: New TEU capacity up 9 percent vs. 6-7 percent growth. No longer sees industry recovery in 2019 because of volume of new vessel capacity.
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 Japan.
