Bulk Shipping Freight Rates Remain Stable on Persistence of Vessel Over-Supply

Challenging times continue to persist in the global cargo shipping industry.

Freight rates have remained almost stable due to the absence of improvement in demand for cargo ships.

Slowdown in the Chinese economy has retarded global trade in commodities, thus lowering demand for cargo ships. China is the biggest importer as well as exporter of several commodities, including coal and iron ore.

Over-supply of cargo ships compared with demand has taken a toll on freight rates. Industry experts have forecasted that freight rates are not likely to improve and will remain at lows at least during 2016.

Current freight rates (coal cargoes)

Freights in USD/MT
Source: SteelMint Research

Current freight rates (iron ore cargoes)

Freights in USD/MT
Source: SteelMint Research

The recent spurt in iron ore trading on account of revival of steel production in China has, however, brought in some shipping activity, but it was not strong enough to positively impact upon freight rates.

The gradual increment of crude oil prices also has failed to strengthen demand for ships, ruling out any improvement in freight rates.

The Baltic Dry Exchange was recorded lower at 642 points, as on 5thMay’16, on account of sluggish conditions. The index is an indicator of global movement of shipping freight rates in respect to cargoes transporting commodities, including coal and iron ore. On 3rdMay’16, the index was recorded at 682 points.