Bulk ocean freight rates rise

The Baltic Dry Index (BDI), an index that brings bulk ocean freight shipping rates managed by London’s Baltic Exchange, is bringing good news to shipping companies that have struggled to survive over the past decade.

From the low 595 points on February 11, 2019, BDI reached 2,191 points on Monday, July 22, rising 2.68 times in just over five months. However, most of the gain came in the last month.

According to market analysts, the return of operations at the iron ore mine at Brucutu, coupled with China’s iron ore orders, has suddenly increased demand for large vessels, raising the fee for bulk carriers

Capesize vessels, which are mainly used on long journeys to transport iron ore from Brazil to China, have a heavyweight in BDI. As demand for this class of vessels soared, there was a corresponding spike in the index.

Spot tariffs for Capesize vessels, with a capacity of 300,000 tons rose to US$32,000 a day last week from US$7,561 a day in February. For smaller Panamax ships, ocean freight rates increased from US$4,700 to US$17,348 a day.

Sea lines that have vessels available for spot charter will benefit most from the high prices as some of the larger ships are being upgraded with scrubbers, an instrument that can reduce their sulfur emissions. The International Maritime Organization has asked all ships to use 0.5% sulfur fuel from the current 3.5% as of January 1, 2020.

As a result, several ships are now at docks installing the scrubber that will allow them to use fuel with high sulfur content at a low price, further increasing the demand for large vessels.

Source: The Telegraph

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