- Leading freight operators expect dry bulk shipping costs to rise.
- Importers like China to restock after supply shocks last year due to bumper soybean harvests in Brazil and unsold grains reserves in the US.
- The COVID-19 pandemic in China, a major exporter of grains, coal, and iron ore, has slowed the dry bulk shipping business.
Grains export push to boost dry bulk shipping market, states a Nasdaq news report.
Grains supplies were affected
Grains supplies were also affected by the war in Ukraine for part of last year until a United Nations-backed corridor was set up, although exports have slowed of late.
Shipping participants say they are already seeing early freight chartering ahead of the start of the South American export season and expect that to gather pace from April.
Grains account for 50% of cargo carried by London-listed Taylor Maritime Investments, which is already seeing more trade from the U.S. Gulf.
“We did see cargoes coming out of Mississippi a month in advance, which we would not normally expect to see,” its chief executive Edward Buttery told Reuters.
“I’m not expecting a massive recovery in rates this year, but I am expecting a good recovery.”
Limited dry bulk ship ordering
Limited dry bulk ship ordering and scrapping of smaller ageing vessels, especially used in grains trade, and less energy efficient are also expected to tighten vessel availability this year.
“China’s grain stock levels are relatively low, so it’s not just the supply side of the equation but the demand is there,” said Jan Dieleman, president of Cargill’s ocean transportation division.
“We are seeing quite interesting movement coming ahead of us.”
New maritime environmental regulations introduced in 2023 are also expected to mean ships slow down speeds to cut emissions, further reducing vessel availability.
“The reshuffle of trade routes is already taking place and other exporting nations filling the gap of the lost Ukrainian supply,” Star Bulk Carriers CEO Petros Pappas told a Feb. 17 earnings call.
“Furthermore, a record high Brazilian soybean crop is currently harvested while the recovery of the Chinese economy should substantially increase the (soybeans) demand.”
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Source: Nadaq
