World Grain - January 2022 - 34

FEATURE: WILL VOLATILE SHIPPING MARKET CONTINUE?
First, a massive increase in grain shipments saw vessel
queues lengthen. Secondly, a trade and diplomatic dispute
between Australia and China saw China implement
a range of restrictions on the purchase of Australian
exports. This resulted in many vessels loaded with
Australian coal being stranded outside Chinese ports
where they were not allowed to discharge their cargoes.
Then, in the third quarter, when China faced power
shortages, some of these vessels were allowed to discharge
their coal, resulting in an increase in congestion.
Thirdly, shipping also faced a string of weather-related
disruptions in China in 2021 that has added to
supply chain inefficiencies. And finally, China's strict
COVID-prevention regulations have seen entire port
zones closed or forced to work in ways that have impacted
productivity. This change in regulations has led
to multiple vessel delays and re-routings and added to
pre-existing inefficiencies.
Container shipping cost inflation
Another key factor in bulk shipping pricing inflation
this year has been the even larger cost increases for
container shipping. As many US agricultural exporters
are well aware, the soaring costs of container shipping
over 2020-21 and that market's own huge disruptions
have added to pressure on the bulk market because the
containerization of grains has become increasingly
costly - if equipment and space can be secured at all.
" As container rates went very high in 2020, many
cargoes, such as grain and steel products, which are
shipped in dry bulk as well as in containers, shifted
from containers to dry bulk, " Rani said. " This de-containerization
increased the demand for dry bulk vessels,
mainly the smaller vessels. "
Agriculture also has been a factor in dry bulk freight
rates in 2021. Alex Karavaytsev, economist at IGC,
said the grains and oilseeds trades was estimated to
have expanded by 4% in the 2020-21 season.
" This was in part due to relatively low labor intensity
of the sector and broad-based exemptions for grains
and oilseeds trade from government pandemic-related
restrictions, " he told World Grain.
Grain trade flow shifts increase pressure
Changes in grain flows exacerbated the pressure on
bulk carrier vessel supply in 2021, noted Rani.
" The overall global dry bulk trade increased by 4.5%
in the first three quarters of this year compared to the
same period of 2020, whereas the global grain trade
increased by 6%, " she said. " The more important point
to note here is that the grain trade has shifted on the
long haul mostly away from Australia-China towards
US-China.
" Hence, in terms of shipping demand, or tonne-mile
demand, dry bulk tonne-mile demand increased by less
than 4% in the first three quarters of this year whereas
grain tonne-mile demand increased by a whopping 8%
during the same period.
" The US-China grain trade increased from less than
10 million tonnes in the first eight months of 2020
to close to 30 million tonnes during the same period
this year. "
The US-China
grain trade
increased from
less than 10
million tonnes
in the first eight
months of 2020
to close to 30
million tonnes
during the same
period this year.
Pooja Rani,
Marine Analytics
34
January 2022 / World Grain / World-Grain.com
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World Grain - January 2022

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