Port Delays and Diversions Contribute to Strength in Dry Bulk Sector

24 August 2020

Port delays and diverted voyages are creating bottlenecks and inefficiencies that are contributing to the recent strengths in the dry bulk shipping sector. According to Maritime Strategies International, these factors are having an unusually strong impact on market balances and will play a key role in the short-term outlook for dry bulk shipping.

 

MSI highlighted the recent strengths in dry bulk noting that July was another positive month with average monthly spot rates rising to their highest level this year for all benchmark vessels, according to its Horizon Monthly report. They pointed to a recent resurgent seaborne iron ore market that provided a boost to earnings in June. However, they noted that the market showed signs of slowing in July with Australian exports declining from record June levels and Brazilian exports falling just over five percent month over month. Stockpiles of iron ore at Chinese ports they noted have recovered partially from long-term lows in early June, up by eight percent in early August.

 

“Port delays are partly related to robust trade, iron ore in particular, partly due to poor weather and slower operations due to COVID-19,” says MSI Dry Bulk Analyst William Tooth. “COVID has also driven inefficiencies in vessel operation; several vessels bound for China have recently diverted to the Philippines to change crews, lengthening voyage times and reducing the available fleet.”

 

Analyzing the factors contributing to the recent strengths in the market, MSI reports that delays at ports, particularly those in China, are absorbing tonnage. Citing data from Refinitiv, the highlighted that vessels are waiting on average 61 percent longer at key Chinese ports. Delays are particularly bad at the northern port of Rizhao where vessels waited for an average of 6.2 days last month, compared to 2.1 days in July 2019, MSI said. Their analysis shows that an increase of four days for iron ore discharges in China creates a need for an additional two percent in tonnage capacity.

 

“With regards to the short-term fundamentals outlook, MSI is positive for the third quarter, with demand underpinned by robust iron ore trade in particular, more than offsetting weaker coal trade, however, we expect a downwards correction from current strong earnings,” adds Tooth. “As we head into the fourth quarter, the downturn will be partly driven by the cumulative effects of strong supply growth this year, and an expectation that fleet efficiencies ease. However, if sustained for a longer period, these fleet inefficiencies would continue to represent upside risk to MSI’s Base Case.”

 

Inefficiencies at the ports related to COVID-19 should revert closer to normal levels says MSI as restrictions to the movement of people, goods, and business operations are gradually lifted. They also noted that the impact of recent poor weather in China will also be temporary, causing disruptions to ease.

BY THE MARITIME EXECUTIVE 08-20-2020 05:34:01

Comments (0)


Today
8:03am
Hi Jenna! I made a new design, and i wanted to show it to you.
8:03am
It's quite clean and it's inspired from Bulkit.
8:12am
Oh really??! I want to see that.
8:13am
FYI it was done in less than a day.
8:17am
Great to hear it. Just send me the PSD files so i can have a look at it.
8:18am
And if you have a prototype, you can also send me the link to it.

Monday
4:55pm
Hey Jenna, what's up?
4:56pm
Iam coming to LA tomorrow. Interested in having lunch?
5:21pm
Hey mate, it's been a while. Sure I would love to.
5:27pm
Ok. Let's say i pick you up at 12:30 at work, works?
5:43pm
Yup, that works great.
5:44pm
And yeah, don't forget to bring some of my favourite cheese cake.
5:27pm
No worries

Today
2:01pm
Hello Jenna, did you read my proposal?
2:01pm
Didn't hear from you since i sent it.
2:02pm
Hello Milly, Iam really sorry, Iam so busy recently, but i had the time to read it.
2:04pm
And what did you think about it?
2:05pm
Actually it's quite good, there might be some small changes but overall it's great.
2:07pm
I think that i can give it to my boss at this stage.
2:09pm
Crossing fingers then

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