Ocean Freight
Ocean freight rates have been going up in the Pacific, where the commodities trade has been steadily picking up. Atlantic rates have been more subdued, but the higher rates in Asia could eventually impact freight rates in the Atlantic.
There is also upward pressure on rates for vessels from Asia going into the US Gulf, where there is an excess of ships, with more going in than coming out. In this regard, it is an unappealing destination for vessels right now. Expect to see higher premiums for Gulf-bound cargo from Asia.
Since last month, steel transportation rates for Handymax vessels coming from East Asia to the US have increased by approximately $5 /mt. Rates for ships coming from the Baltic, Black Sea, and Mediterranean Sea to the US are poised to go up soon.
Going rates for Handymax ships carrying large tonnages of steel (minimum 15'000 tons of hot rolled coils, rebar, wire rod, etc.) are as follows:
Baltic to US East Coast: $40 /mt to $45 /mt
Baltic to US Gulf Coast: $35 /mt to $40 /mt
Black Sea and Mediterranean Sea to US East Coast: $40 /mt to $45 /mt
Black Sea and Mediterranean Sea to US Gulf Coast: $35 /mt to $40 /mt
East Asia to US Gulf Coast: $55 /mt to $60 /mt
East Asia to US West Coast: $40 /mt to $45 /mt
Port Issues
Labor problems persist in the Gulf area as the Port of New Orleans continues to experience post-Katrina labor shortages. Many dock workers have either left the city after being rendered homeless by the hurricane or have left recently, after government aid in the form of temporary housing on cruise ships was taken away.
There are also fleeting problems at the Port, and infrastructure is still not 100 percent. There is still a lack of stevedores and towing equipment in order to load and move the barges around.
On the East Coast, ports are under pressure for lack of inside storage for weather-sensitive cargoes, particularly in Philadelphia and Baltimore, but also in Camden and Wilmington. There are delays for ships in those areas, and in some cases, five to seven days waiting for berths. Steel cargoes are coming in to the ports faster than they are being absorbed off the docks, so there are a lot of space issues. This problem does not look like it will be resolved quickly.
Barge Transportation
Barge availability is still tight, but it is better than it was last month. Some of the tightness in the market has been easing as supply and demand are starting to reach equilibrium. Prices are about $1 /ton less than they were a month ago, though the spot market prices are still higher than contract prices. The market is starting to settle down, and we will soon see prices get more competitive.
Rail Transportation
The rail car availability is still very tight and the waiting time for rail cars can be up to four weeks.
The availability is particularly bad in the Houston area, especially for covered gondolas.
The fuel surcharge for rail cars is still 12 to 13 percent and has not changed since last month.
Truck Transportation
The trucking market still tight, but availability varies depending on area. There is still pressure on rates, which are moving upward because there is still greater demand than supply.
Based on the current diesel price of $2.54 /gallon, the trucking surcharge is now about 15.5 percent. This is an increase from last months' surcharge, which was around 15 percent, based on the diesel price last month of $2.47 /gallon.