Ocean freight rate dip short-lived
Sources say that in the last month, ocean freight rates have peaked, come down, and then bounced back up slightly. Traders and shippers had welcomed the reprieve when the astronomically high prices started to come back down to earth, only to see rates rebound slightly again. Most believe that rates won't rise much higher this summer, but for now, they are lingering at record levels. Business is very slow on the steel import side due to the slumping US steel market, and is expected to get even slower as a result of the continued weak prices as well as the antidumping petition filed against Chinese pipe. However, despite the slow steel business, other sectors are obviously keeping ocean freight rates tight.
Overall, in the past month, per-ton handymax rates for cargoes bound East Asia to the Gulf coast have come down by approximately $3 /mt
Per metric ton handymax rates (minimum 15k tons of rebar, wire rod, hot rolled - big tonnage):
Baltic to US East Coast: $58 /mt to $63 /mt
Baltic to US Gulf Coast: $53 /mt to $58 /mt
Black Sea and Mediterranean Sea to US East Coast: $53 /mt to $58 /mt
Black Sea and Mediterranean Sea to US Gulf Coast: $51 /mt to $56 /mt
East Asia to US Gulf Coast: $78 /mt to $83 /mt
East Asia to US West Coast: $73 /mt to $78 /mt
Rebar shipments temporarily clog Inbesa
The main steel ports are still very quiet as so little steel is coming in. There have been no real problems or congestions in the last month, except for some slight delays at the Inbesa terminal at the Port of Houston. These delays occurred in late June into early July as a result of several large rebar shipments coming from Turkey, Thailand, Singapore, and Taiwan. The congestion has since been relieved.
Barge fuel surcharges rebound sharply
Barge availability is still good, and rates have remained stable in the last month. There are still very few steel cargoes being shipped by barge, but the upcoming grain season may keep the market afloat. The extent to which grain activity keeps the barge market tight this fall remains to be seen, with carriers expecting it to be strong and others speculating that the tightness expected to be caused by the grain season may just be a lot of "hype." The strength of this year's grain season and its effect on the barge market will not be apparent until mid-August.
Fuel surcharges for barge contracts from some of the major carriers have risen to 20 percent in the third quarter, reflecting the rising oil prices. Fuel surcharges as high as 29 percent have been heard from certain carriers.
Truck and rail fuel surcharges rise with diesel prices
Although diesel prices fell slightly in May, US crude oil prices are on the upswing again (currently at around $72 per barrel), and as a result, diesel prices are creeping back up. Prices could climb higher this summer and fall depending on the severity of this year's hurricane season and any other potential disruptions at refinery operations.
The rail car fuel surcharge for steel cargoes shipped in July is 15.50 percent, based on May diesel prices of $2.80 per gallon. In August, the surcharge will rise to 16.0 percent, based on June diesel prices of $2.81 per gallon.
The fuel surcharge for truck transportation has increased along with the slight increase in the on-highway average diesel price from the previous month. Most fuel surcharges for trucking (LTL) are up 0.5 percent from last month, now at around 18.5 percent, based on the current on-highway average diesel price of $2.85 per gallon.