Out of the doldrums
Despite reports of record cargoes, freight rates continue to decline. The start of February saw the Baltic Dry Index plummet to a 25-year low of 647. The zeal of ship owners to keep shipyards busy in recent years is now catching up as capacity outpaces demand.
Freight rates continue to bump along the bottom since the low of 647 on 3 February. The latest indications, on 22 February, put the Baltic Dry Index (BDI) at 704. This year to date, the index is down 59 per cent and lower global steel production and a bearish outlook for Chinese coal contribute little to improve the situation for ship owners.
The Baltic Panamax Index (BPI) fell 3.22 per cent with average daily earnings for panamaxes falling to US$6971 on 22 February and further to 836, recording a 4TC average of US$6705. “There is definitely a weak downturn, particularly in the Atlantic, for the panamaxes,” said Peter Norfolk, research director at freight broker FIS. This year, earnings for panamaxes have dropped 47 per cent. “The panamax market in the Atlantic is really in need of the boost from the grain export volumes out of South America, which really have not been visible so far this year,” Norfolk said.