The More Congested the Better for Dry Bulk Shippers [REPORT]

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August 10, 2012

(Bloomberg) — Reduced congestion in Chinese and Brazilian ports is cutting earnings for ships hauling raw materials, according to RS Platou Economic Research.

About 5.4 percent of dry-bulk carriers are tied up at ports, down from 7.5 percent in May, Herman Hildan, an analyst at RS Platou Markets AS in Oslo, said in an e-mailed note today. Congestion declined in Brazilian ports as exports shifted to Australia, and falling coastal trade helped clear out Chinese harbors, he said. That’s cutting fleet utilization by 1 percent, adding to a 0.5 to 1 percent reduction from lower grain output, Platou estimates.

Trip Charter Rates Bulk Carriers
Trip Charter Rates for Bulk Carriers, since March 2012, via RS Platou

Without those two influences, the largest commodity carriers would be earning $14,000 a day, Hildan said in the note. Daily income for Capesizes fell 5.3 percent today to $3,852, according to the Baltic Exchange, the London-based publisher of shipping costs. The Baltic Dry Index, a broader measure of raw-materials shipping costs, declined for a 24th day, falling 2 percent to 774, the lowest since March.

“Lower congestion adds to the dry bulk pain,” Hildan said in the note.

Daily earnings for Panamaxes, which carry about half as much cargo as Capesizes, fell for an 18th day, decreasing 1.2 percent to $6,483, according to the exchange. Supramaxes declined 2.2 percent to $9,264, and Handysizes, the smallest vessels tracked by the gauge, slid less than 1 percent to $7,699, both the lowest since March.

– Isaac Arnsdorf, Copyright 2012 Bloomberg
spot market dry bulk
via RS Platou
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