North American transportation and logistics

Thursday, 20 July 2006 02:09:52 (GMT+3)   |  
       

Ocean freight Ocean freight rates for cargos coming from the Baltic, Black, and Mediterranean Seas have increased slightly, as high oil prices have driven bunker costs up. However, rates for cargos coming from East Asia have declined slightly, tightening the gap between the Atlantic and Pacific rates. Still, usual seasonal softening we usually see during the summer months has not occurred. Experts predict that the rush to ship cargoes by year-end will be more exaggerated this year, causing a short-term increase in prices during the fourth quarter. 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: $42 /mt to $47 /mt Baltic to US Gulf Coast: $32 /mt to $37 /mt Black Sea and Mediterranean Sea to US East Coast: $37 /mt to $42 /mt Black Sea and Mediterranean Sea to US Gulf Coast: $32 /mt to $37 /mt East Asia to US Gulf Coast: $58 /mt to $63 /mt East Asia to US West Coast: $53 /mt to $58 /mt Port issues There are still record numbers of imports flooding US ports, so there is still high traffic and limited space at most ports. The Port of Houston remains very congested with record-high import levels. There is still a lack of inside storage space and there are reports that certain cargos are not being accepted because there is no room for them. Waiting times at the port can be as long as two weeks. Handling costs, however, remain competitive. The Port of New Orleans is also taking in record volumes of cargos. Port representative Chris Bonura told SteelOrbis that steel imports at the port are up about 25 percent in the first four months of 2006 (compared to four months of 2005). The port is still congested, but some carriers have resumed Mid-Stream shipping. The labor availability issue remains a problem, though now approximately 85 percent of the work force has returned and the recently passed “Road Home” housing initiative will help to provide more housing in the New Orleans area. East Coast ports, while realizing some let-up from the heavy congestion they have experienced in the last few months, are still suffering from lack of inside storage space. West Coast ports are reportedly very congested with extended waiting times. Barge market Barge availability is reportedly good, as long as they are ordered a couple weeks in advance. However, as we mentioned last month, the autumn grain shipment season will tighten barge availability and cause carriers to increase spot market rates. Third quarter barge fuel surcharge rates will be at least 30 percent. Rail/Truck The current rail fuel surcharge is still at about 16.5 percent this month. Rail car availability remains a problem and no relief is expected to occur any time soon. The trucking fuel surcharge is now about 19.5 percent, up 0.5 percent from last month. However, because of rising diesel costs, the trucking surcharge is expected to be up to 24 percent in August. Truck availability is reportedly better than rail car availability.

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