World Grain - July 2021 - 38

FEATURE: SHIPPING COSTS SOARING
BALTIC CAPESIZE INDEX
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4,000
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2,000
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1,000
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1 million tonnes in the first four months of this year.
" Compensating for that loss there has been strong
growth in exports to Indonesia (up 154.7% to 1.7 million
tonnes), and seemingly out of nowhere Australia has gone
from not exporting any grains to Saudi Arabia in the first
four months of the year since 2018, to suddenly exporting
2 million tonnes, making Saudi Arabia the largest destination
for Australian grains so far this year, " Sand said.
There is little on the ship supply side of the equation
to suggest freight rates will soften any time soon.
While there has been brisk trade in secondhand ships
this year as owners and operators rush to cash in on the
boom in demand, Bimco noted in May that in the year
to date just 92 ships have been ordered, versus 111 in
the same period of 2020. Panamax ships were the most
popular option with 44 ordered. Of the 30.1 million
DWT expected to be delivered this year, just 16 million
DWT had arrived in late May, compared to demolitions
of 4.2 million DWT.
" This leaves the fleet at 923.9 million DWT, 1.3% up
from the start of the year, " Sand said. " In the full year,
Bimco expects the fleet to grow by 2.4%, with demolitions
likely to reach around 9 million DWT. This will
be the slowest fleet growth since 2016. "
For shippers hoping for lower shipping costs, there
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are some optimistic signs, however. On top of high
demand for bulk carriers and more need for long-haul
deliveries, logistics bottlenecks have prevented the optimal
deployment of the global fleet in recent months.
This is mostly due to a geographically uneven economic
recovery, port congestion and COVID-19 outbreaks
among crew, which are forcing some vessels
to quarantine.
However, as some of those disrupting factors are removed,
MSI believes markets could soften.
" There is growing evidence that port congestion is
falling, particularly in Brazil and China, after absorbing
significant amounts of tonnage during the first
quarter of the year, " Sand said. " This would remove
an important support for the market. Meanwhile, the
direction of trade will closely depend on China's responses
to rising inflation and potential overheating of
economic growth. "
Michael King is a multi-award-winning journalist as well as a shipping
and logistics consultant. He also supplies an array of corporate
services - www.mkingassociates.com. For more information,
email mikeking121@gmail.com.
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July 2021 / World Grain / World-Grain.com
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World Grain - July 2021

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