World Grain - August 2010 - 50

FEATURE: FREIGHT RATES SOFTEN

the onset of the monsoon season in India
released large numbers of panamax and
smaller vessels back into the market,
just as capesize demand dried up. "Demand for coal from Indonesia into China is very strong, but the tonne-miles involved don't compare to ECSA-Asia,"
said the panamax broker.
Another factor has been vessel supply. Capesize newbuilding deliveries
totaled 111 in 2009; by early July this
year they had already reached 106, according to figures from FIS. Panamax
new deliveries after just over six months
of 2010 totaled 83, compared to 84 in
the whole of 2009. Delivery rates for
smaller vessels have also been aggressive, adding significant capacity to the
global bulk carrier fleet.
WHAT'S NEXT?
While newbuilding deliveries are expected to anchor rates for the rest of the
year, the demand picture remains relatively healthy for the dry bulk carrier fleet.
Drewry predicted earlier this year that
total seaborne trade would grow by 6.8%
to 3.185 billion tonnes this year after declining by 1.8% in 2009. Grain shipments
would increase to 243.3 million tonnes, up
16.1% year-on-year, the biggest percentage gain of any of the bulk trades.
Rahul Sharan, a dry bulk analyst on

Drewry's India desk, believes the market
will remain bearish in the coming months
before picking up as the year progresses.
He told World Grain the slowdown in
the Chinese housing sector and iron ore
price negotiations were key factors in the
recent freight rate slump. "This will continue for the next few months, but it is not
expected to continue until the year-end,"
he added. "Deliveries are playing a role,
but it is mainly this short-term pricing
and the Chinese factor."
As the year progresses, U.S. grain exports - forecast by Drewry to rise from
73.7 million tonnes in 2009 to 88.8 million tonnes this year - would become
more of a factor for smaller vessels and
"may impact even the panamax rates
later in the year," said Sharan, with buyers in North Africa, the Middle East and
Asia more aggressive this year than last.
The U.S. would also step into the
breach left by lower anticipated Canadian exports, with exports from the U.S.
Gulf driving up tonne-miles.
Grain and soybean exports out of
the U.S. dropped 16% to 113.7 million
tonnes during 2008-09, from the previous year's record, according to figures
from Informa Economics. Exports during 2009-10 are forecast to rebound 5%
to nearly 120 million tonnes, with soybean exports out of the U.S. forecast to

Attention
Qualified Readers!
Validate your FREE
subscription to World Grain.
It's easy to register by
phone, email or log on to
our website. You can then
be certain to be on top of all
the important developments
and information featured in
upcoming issues.
Call:
1-816-756-1000
E-mail:
jarnone@sosland.com
Log on:
www.world-grain.com
Notice: If this is not
your copy of
World Grain, don't
wait for the next issue
to eventually reach your
desk - call today
to see if you qualify for
your own copy.

All-Digital delivery
now available!

U.S. grain, containers and bulk
The steep rise in container freight rates and the global shortage of boxes in recent
months has prompted a significant change in U.S. grain shipping habits, according to
Ken Eriksen, senior vice-president for Transportation Services at Informa Economics.
Based on U.S. Department of Agriculture (USDA) export inspection data, just over 1%
of inspected grain exports were moved in a container during May and June. During periods of high dry bulk freight rates a couple of years ago, the container sector garnered
between 4% and 5% of the total.
"There remains a certain portion of the share of U.S. grain and soybean exports that
move in a container, but recent drops in bulk freight rates have rendered containers to
be more expensive and resource consuming in terms of container availability, USDA
inspection, man hours, and such," he said.
The movement of DDGS (distillers dried grains with solubles), the co-product of ethanol, has been something of an exception to the rule. "DDGS exports have been rapidly
rising, especially to China where imports of DDGS one year ago were negligible and
now exceed 160,000 tonnes monthly," he said. "I know grain transloaders are busy
transloading grain from truck or rail into container. We have also heard of a DDGS
barge moving down the Mississippi River to Memphis and transloaded into a container
to be railed to Los Angeles for export."
www.World-Grain.com / World Grain / August 2010

r
,
b1fi

�4ff

� /
51

http://www.world-grain.com http://www.World-Grain.com

World Grain - August 2010

Table of Contents for the Digital Edition of World Grain - August 2010