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New orders for bulk carriers represent 6,8% of the deadweight tonnage of the total fleet of the multinational Genco, which has 41 ships
Due to the strong demand to transport commodities, it causes displacements in the supply of bulk carriers in Brazil, and the solution for shipments of wood and grains has been loaded on a type of larger ship normally used to transport coal and iron ore. More offshore oil fields were put up for sale by Petrobras in the Campos Basin – RJ, on this day (23/03)
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Capesize cargo ships will be used this month or next to transport lumber from Uruguay and grain from Brazil, according to shipping data from S&P Global Platts.
These large ships are normally used to transport coal and iron ore, while wood is normally transported on smaller vessels, according to the CEO of Genco Shipping & Trading, John Wobensmith.
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“It just goes to show how tight the overall dry bulk market is, which is set to get even tighter,” Wobensmith said in an interview on Thursday. The high freight rates "are not just something for the next three months", said the executive, according to which the trend should persist throughout 2022 due to the lower availability of ships.
Capesize ship freight rates in 2021 are costing around US$18 per day, which corresponds to an increase of almost 40% compared to the average in 2020, said Wobensmith.
Ship freight rates are expected to rise further in 2021 due to increased import and export in Brazil
And not to stop there, tariffs should rise even more, as a result of the increase in coal imports from India and Vietnam and the growing exports of grains and iron ore from Brazil.
In normal times, niche cargoes such as lumber tend to be delivered in smaller vessels such as the Panamax, which is the maximum size allowed for the Panama Canal. But the costs of these ships have risen so much that they now exceed the fees of the Capesizes.
New orders for bulk carriers represent 6,8% of the deadweight tonnage of the total fleet of the multinational Genco, which has 41 ships, according to the company's website.
There is reluctance to buy new ships due to changes in environmental regulations and uncertainty about the landscape with dominant clean fuel, Wobensmith said. Genco believes that ammonia will be used by industry in the future, she added.
Supply of solid bulk carriers was already under pressure because of Covid-19 restrictions
According to Gerry Craggs, managing director of Stemcor SEA, the supply of solid bulk carriers was already under pressure as Covid-19 restrictions related to maritime and dock workers slowed down cargo deliveries. Stimulus by governments to recover economies rocked by Covid-19 also boosts demand for raw materials, he said.
“We're in the phase of fiscal stimulus pretty much around the world,” Craggs said in an interview on Friday. “Demand has been increasing for pretty much everything, and we see that effect in the steel sector and in commodities.”
Dry bulk started 2021 off on the right foot, Bloomberg Intelligence analyst Lee Klaskow said in a report last week. “China and the expected global economic recovery set up one of the strongest starts to a quarter for dry bulk demand in a decade.”
