The ongoing U.S. port strikes, especially at the Port of New Orleans, are resulting in severe congestion and delays. As a crucial Gulf Coast port, New Orleans handles a significant volume of dry bulk commodities, such as agricultural exports like grains. Due to the strikes, ships are experiencing extended waiting periods for unloading and loading cargo, leading to higher costs for shipping companies and potential disruptions in supply chains, reports Breakwave Advisors.
Widespread Disruption
The central focus in seaborne trade this week is the ongoing strike at U.S. ports, which is causing widespread disruption across the industry. Dockworkers at 36 major ports along the East and Gulf Coasts, including critical hubs like Houston, New York, and Savannah, are on strike, resulting in significant delays in vessel loading and unloading.
Experts estimate that the strike could cost the U.S. economy up to $4.5 billion per day. Since the strike began on October 1st, container traffic has already been heavily impacted, while the number of dry bulk vessels congested at the Port of New Orleans is hitting new highs. Vessel congestion there has surged by a staggering 190% monthly increase, with a 13% increase weekly. The Handysize and Supramax vessel categories are bearing the brunt of these disruptions, experiencing the highest levels of congestion. There is no clear resolution in sight for the strike. Although President Joe Biden has the authority to suspend the strike for up to 80 days to allow for further negotiations, the White House has stated that he does not currently plan to intervene.
In the dry bulk freight market, the Brazil-to-China route is showing signs of softening, with rates continuing the downward trend seen at the end of last week. However, optimism remains strong, supported by positive developments in the iron ore market and encouraging indicators of economic growth in China. On Monday, iron ore prices experienced another sharp increase, pushing the total gain beyond 20% since China started unveiling stimulus measures last Tuesday.
Mixed Sentiment
The dry bulk freight market has shown mixed sentiment in early October. A softening trend is evident in the Capesize Brazil–North China and Panamax Continent–Far East routes, while the Supramax Indo–ECI and Handysize NOPAC routes have maintained steady market conditions.
- Capesize vessel freight rates for shipments from Brazil to North China settled at $27 per ton, reflecting a 4% decline week-over-week. However, rates remain 14% higher compared to the same week last year.
- Panamax vessel freight rates from the Continent to the Far East have fallen to $36 per ton, with expectations of a continued downward trend in the coming days. Current rates are now 14% lower than the same period last year.
- Supramax vessel freight rates on the Indo-ECI route remain slightly above $11 per ton, reflecting an 8% increase compared to the previous month.
- Handysize freight rates for the NOPAC Far East route have remained steady at $35 per ton since April, marking a 12% increase compared to the same period last year.
Decline In Ballasters
The first week of October began with indications of a continued decline in the number of ballasters for Capesize and Panamax vessels in Southeast Asia, falling below the annual trend. In contrast, there has been an increase in the smaller vessel size categories.
- Capesize SE Africa: The number of vessels has dropped to 90, which is 50 fewer than the peak observed at the end of week 31.
- Panamax SE Africa: The current number of vessels has dropped to approximately 95, marking one of the lowest levels since the start of the year. Recent indications suggest that this figure will remain below the annual trend in the coming days of October.
- Supramax SE Asia: The number of ballast ships has maintained the elevated levels seen in the previous week. Current figures show an increase to over 100 vessels, continuing the upward trend observed at the end of September.
- Handysize NOPAC: The number of ballasters amid signs of an increase to over 90, the latest indications eventually signal a downward trend below the annual trend at around 75.
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Source: Breakwave Advisors
