North American transportation and logistics

Ocean Freight Steel shipping rates are still on the rise, and experts predict that we will not see any easing off any time soon. While some traders feel that these sky-high rates are unsustainable, import bookings remain high, and the fact that rates are still rising during the typically slow summer months is a testament to how firm the market really is. Experts predict that the high demand for ships worldwide will continue until at least the beginning of 2007. The demand for ships in the Pacific remains particularly high, as the majority of steel imports come from this region. The rise in the bunker, the rise in charter hire, and the futures market are additional factors that are contributing to high shipping prices. 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: $50 /mt to $55 /mt Baltic to US Gulf Coast: $40 /mt to $45 /mt Black Sea and Mediterranean Sea to US East Coast: $45 /mt to $50 /mt Black Sea and Mediterranean Sea to US Gulf Coast: $40 /mt to $45 /mt East Asia to US Gulf Coast: $65 /mt to $70 /mt East Asia to US West Coast: $60 /mt to $65 /mt Port issues US ports continue to be flooded with imports, and congestion is still a major problem. As a shipping expert told SteelOrbis this week, “Import bookings remain extremely strong, and the easing of the port situation would tie into reduced imports. At this point, I think there's still a lot (of imports) in the pipeline, so in the foreseeable future, I think we're going to see shipping rates continue to hold up as they have been.” The Port of Houston still remains quite congested. Everyone is snapping up available warehouses, traders are entering into long-term contracts for warehouse space. There are still lines of ships waiting at some of the favorite terminals, with waits up to two weeks long. Barge market As we reported last month, the barge market has been tightened some by the grain season, which typically peaks in September. This has pushed spot prices up, however, availability remains relatively good, as long as they are booked a few weeks in advance. Third quarter fuel surcharges tacked on by carriers to pass along bunker costs to customers are at a whopping 35 to 40 percent. Rail/Truck The entire infrastructure of the transportation market is having a very difficult time handling the amount import steel shipments, and the truck and rail sectors are no exception. Truck and railcar availability remains tight and fuel surcharges are still on the rise. Most rail surcharges are at about 17 percent, up 0.5 percent from last month, and will increase to 18 percent in October. Trucking fuel surcharges are currently about 20.5 percent, up 0.5 percent from last month.