Industry observers observe the need for smaller vessels grow
The Baltic Exchange’s main sea freight index tracking rates for ships ferrying dry bulk commodities edged up on 24 June 2021. Gains in the panamax and smaller segments offset a slight dip in rates of the larger capesize vessels.
Alternative transportation sourcing
The overall index factors in capesize, panamax, supramax, and handysize shipping vessels advanced 28 points, or 0.9 percent, to 3,175 points. The capesize index reduced by seven points to 3,861 points. The index that tracks ships transporting 150,000-tonne cargoes such as iron ore and coal peaked on 14 June 2021 at 4,212 points. This propelled the main index to an 11-year high but has since pulled back. Average daily earnings for capesize reportedly fell from $61 to $32,018.
Ship-broker Fearnleys said, “The decline could be attributed to reduced exports via West Australia “and a ‘sudden’ release of vessels from discharge ports in China and India. However, the North Atlantic has recently been more active, and rates improved significantly. This has spread to the other segments sentiment as well. Thus levels seem to increase over the coming days.”
Most notably, the average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased from $879 to $31,639. The supramax index too rose 12 points to 2,864 points. Benchmark iron ore futures, for September delivery, rose 0.9 per cent to RMB1,165 per tonne. The panamax index added 97 points, or 2.8 per cent at 3,515 points, ending a long streak of declines.
These fluctuations reflect neither changes in economic conditions nor a shift in raw materials’ needs. It instead reflects a blatant switch in shippers’ preference. Confidence in super carriers is compromised with the influx of port congestions, outrageous rates, and equipment shortages. Additionally, deteriorating customer-supplier relationships will only encourage shippers to use other means to deliver their goods on time.