North American transportation and logistics
Ocean Freight:
Ocean
freight prices for large tonnage steel products remain steady and will improve further, due to higher trade levels from Asia and
Europe. New orders are being booked for
wire rod and flat rolled products from
China, and this will keep the market hot until at least April. Also,
freight rates may increase slightly.
On the supply side, a seven percent dry bulk capacity was added to the world fleet in 2005, and more vessels are expected to be built to add significant capacity in 2006.
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: $50 /mt to $55 /mt
East Asia to US West Coast: $35 /mt to $40 /mt
Ports:
Port congestion and waiting times remain to be one the biggest concerns in the steel transportation market right now. A lot of ports are experiencing congestion, lack of inside and outside storage space.
There is an influx of steel imports with some reported vessel delays in places like Houston, Los Angeles, Vancouver, British Columbia, Baltimore, and Philadelphia.
Barge Transportation:
Barge availability is very tight, as the plethora of grain exports are bringing a lot of barges southbound, tying up southbound market. Contract customers have coverage, but availability is tighter on the spot market. The huge surge in import steel will most likely keep the barge market tight into the second quarter. Also the opening of the upper Mississippi River will occur sometime in March and will add to the barge traffic.
New Orleans has a very serious congestion problem, with fleets full of barges and limited towing availability. Since Katrina, there are less tows around than there used to be, limited labor for boat cruises, and a high volume of barges fulfilling both southbound and northbound demand. It has been very difficult to get barges with sufficient lead time to get them in the right fleeting area for the transfer from bustle to barge. Lead time right now is about 4 days.
The fuel surcharge for barges varies from carrier to carrier. In the first quarter, fuel surcharges range from a low of 25 percent for some carriers to a high of 40 percent for other carriers.
Rail transportation:
Rail car availability continues to be tight across all segments of the steel industry, with high demand for gondolas and coil cars, particularly covered coil cars.
Going fuel surcharge rates are 12 to 13 percent.