Despite damaged ports and delayed imports of bulk commodities in Japan, the overall ocean freight market is relatively flat at present.
News reports indicate that ports handling around 7 percent of Japan's industrial output were substantially damaged in the devastating March earthquake and tsunami, as well as several mid-range container terminals, but most of Japan's container facilities are located in Southern ports. Shipments are being diverted mostly to the five major ports of Tokyo, Yokohama, Nagoya, Kobe and Osaka--which, according to Banchero Costa, account for about 70 percent of overall container volumes as it is.
Another consequence of the disaster is drop in coal prices from Australia, due to two major Japanese utilities--under pressure from damaged ports and power plants--declaring force majeure on deliveries. Also, while it does not have as much of an impact as the aforementioned situations, it has been reported that ships have been directed to steer clear of Northern Japan to avoid the waters near the Fukushima nuclear plant, which has been leaking radiation (some carriers have directed ships to keep as much as a 140-mile distance from the shore).
However, vessel overcapacity in the dry bulk market has had much more influence on freight rates than the situation in Japan, and if it were not for still-high bunker (fuel) rates from escalating tensions in the Middle East, rates would have softened significantly by now. Another factor influencing rates is the continual drop in iron ore exports from India (down 18.6 percent year-over-year in February).
Capesize rates started March with a bang, increasing 93.5 percent from the previous week, based on strong activity in the Atlantic and Far East. However, the rally proved to be short-lived, as rates fell by 1.7 percent during the week of March 11-18. A surge in iron ore exports from Australia to China lifted rates again the next week by 14.4 percent, but followed the pattern by dropping another 1.5 percent by the end of the month. However, that initial 93.5 percent burst has at least kept rates up from February levels, even if there is no indication of another sizeable increase in rates anytime soon.
As for Handymax rates, March saw a slow and steady growth in rates, rising 4.1 percent the first week, 3.7 percent the next week, and 3.5 percent the week after, strengthened mostly by strong activity in the Gulf of Mexico. However, once that activity petered out, freight rates only increased by 0.6 percent the last week of the month. Regarding parcel shipment rates, after rising by $7/mt in February, rates have not moved, and are poised to follow a neutral trend for the near future unless oil prices continue to rise and carriers have no choice but to raise rates across the board. Therefore, current Handymax rates to the US for large tonnage of steel (i.e. at least 15K tons of HRC or wire rod) are still as follows:
Baltic Sea to US East Coast: $67-$72/mt
Baltic Sea to US Gulf Coast: $62-$67/mt
Black Sea and Mediterranean Sea to US East Coast: $67-$72/mt
Black Sea and Mediterranean Sea to US Gulf Coast: $62-$67/mt
East Asia to US Gulf Coast: $67-$72/mt
East Asia to US West Coast: $62-$67/mt