Dry freight rates for major Asian routes eased from last week's record highs but remained supported by strong tonnage demand and tight availability. Easing port congestion's in Australia could, however, weigh on rates.
Period charter rates for modern panamax tonnages booked on trans-Pacific voyages were valued around $57,000, more than 1 percent below settlement values seen on Baltic Exchange on Monday. Last week, rates rose to a life high of $58,288.
A lack of supply in the prompt market has forced many charterers to lock in period chartering agreements. "What this is doing is removing more tonnage from the market at least in the medium term, pushing up spot freight rates," a Hong Kong-based shipbroker said.
Strong demand for tonnage to transport iron ore, steel and coal, and lower-than-expected new vessel deliveries in the second half of the year, have helped to prop up chartering rates. A total of 110 Panamaxes were scheduled to hit the market this year, but by the end of May just 33 vessels were in the market trading, a UK-based shipbroker said recently in a shipping report.
"The problem here is that demand is flying off the roof, and there is no physical supply to accommodate that, so rates are just flying, and its worsened by port congestion's," a Tokyo-based shipbroker said.
There have been signs of improvement in congestion at Australia's largest coal export terminal at Newcastle port, where wild weather caused loading disruptions, resulting in a backlog of vessels to load increasing to record levels. Port officials there said that for the week ended July 13, vessel queues fell to 66 ships from the previous week's count of 74.
Waiting times had fallen by six days to 26 days, raising hopes that conditions will improve going into August. "If we can see waiting time drop off to around 15-17 days, maybe lower, then you could very well see freight rates drop off back into around the $48,000 to $50,000 level," a shipbroker said. Port congestion should ease in the second half of the year following the introduction of an allocation system for coal producers.