Freight
Overview
Oil, gas and dry cargoes are being shipped all over the world every day. With seaborne transportation comes exposure to shipping costs. Be it via direct cost or through the prices of feedstocks or finished products, a freight factor is always there. Highly sensitive to market shifts, geopolitics and regulations, freight is a complex and volatile part of every trade.
To manage this exposure, industry participants, from producers and traders to government agencies and financial institutions rely on our freight data for contracts, pricing formulas, analytics and arbitrage tracking.
Argus Freight consists of three dedicated services, covering trade flows for tankers, dry bulk and gas markets. Each service provides daily freight indexes, industry-specific news, market analysis and exclusive content. This enables you to connect the dots between commodity prices and shipping costs, giving you a complete view of the supply chain.
Latest freight news
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Freight nadir disrupts LNG pricing structures
Freight nadir disrupts LNG pricing structures
London, 20 November (Argus) — Prompt spot charter rates for LNG carriers have bucked the usual seasonal trend and reached record lows in recent weeks — limiting the scope for price signals to direct or redirect LNG flows, and help balance the global market. The recent weakness in prompt charter market values has been focused in the Atlantic basin. This stands in contrast with the Novembers of previous years, when the Atlantic has mostly kept at a premium to the Pacific because of European floating storage. The ARV2 prompt rate for US-northwest Europe by tri-fuel diesel-electric (TFDE) carriers was already approaching its record low — set in March 2021 — in the first half of October, passing it later in the month and staying lower. But while the ARV1 prompt rate for Australia-northeast Asia by TFDE carriers had held a sizeable premium to the ARV2 rate, recent falls in the Pacific rate pushed it below its record low — also set in March 2021 — on 15 November, probably partly as some vessels were repositioned to the Pacific from the Atlantic. Sublet market The weak LNG freight market mainly reflects the quick pace of newbuild vessel deliveries in recent months and weak demand for loadings from liquefaction capacity additions. It also reflects minimal incentive for floating storage or inter-basin sailing — at least for those companies not sat on surplus shipping. Around 60 new LNG carriers are due on the water this year, nearly double 2023's 31 deliveries. And the pace of new deliveries will quicken next year, when 91 are scheduled to be delivered. But record low rates and, perhaps more importantly, the fact they are holding there for a sustained period, also reflects a structural shift in LNG freight supply in recent years, which was papered over by a run of strong fourth quarters in 2021-23, and which severely limits the market's ability to react to price signals. Atlantic prompt rates had risen above $250,000/d by January 2021, with exceptionally low vessel availability leaving some firms unable to deliver US cargoes to Asia over Europe, despite a substantial premium for Pacific deliveries. At points that winter, participants reported no open vessels in the entire market. While already moving in this direction at the end of the last decade, winter LNG freight in the past few years has had few TFDE or two-stroke vessels — and for substantial periods, none — offered for prompt spot charters by shipowners themselves within the season. Instead, nearly all vessel supply has taken the form of charterers seeking to sublet carriers they have previously secured for fixed terms — be it for short or long periods. This has stemmed, in no small part, from record high rates during the fourth quarter of recent years leading to a flurry of term chartering ahead of winter. Most firms have preferred the risk of a shipping surplus than the risk of a shortage, after a tight freight market in the middle of winter 2020-21 left some firms having to cancel loadings because they could not find vessels to deliver them. Term chartering was slower this summer than in recent years, and yet almost no owners were left with open vessels ahead of winter, according to market participants. This means carriers offered for subletting are poised to make up the vast bulk of supply in the winter spot charter market — even before charterers piled into the market just before the end of the summer, racing to find carriers as the floating storage incentive failed to emerge and the inter-basin arbitrage closed. And the vast majority of carriers coming on to the water in the latter half of this year are already tied to term charters, with few speculative newbuild orders likely to deliver in the next couple of years. Owners holding open shipping in such a weak market would have been better able to remove vessels from the market when rates fell below their operational costs — deemed by some market participants to a little over $20,000/d, at least for TFDE carriers — effectively acting as a supply-side response to price signals. But this is not an option available to charterers holding surplus ships, with the exception of carriers taken on bareboat charters, pushing them to seek employment at rates below this threshold. For the many firms sat on spare shipping that they initially hoped they could use themselves or sublet in a stronger market, this has taken the form of actual charters or — more commonly — finding employment within their portfolios, such as aggressively competing for fob cargoes or undertaking inter-basin deliveries, even when the spot arbitrage has been closed. New shipping economics Asian LNG markets had continued to command a premium to Europe, although it was insufficient to cover the additional shipping costs — based on spot charter rates — for delivery of US cargoes to Asia rather than Europe, assuming spot deliveries around the Cape of Good Hope route. But for firms sitting on surplus carriers that they are unable to sublet even close to their term charters on the vessels, or sublet at all, there has remained an incentive to continue delivering US LNG to Asia to recoup at least some of their freight costs so long as the additional boil-off and return fuel costs are covered. Together with the inter-basin arbitrage being open for much of the past summer, during which some fourth-quarter US cargoes would have been marketed and then sold into Asia, firms with shipping they deem a sunk cost continuing to deliver to Asia have bolstered inter-basin flows. In turn, this has weighed on European receipts, even when the arbitrage has been closed on strong European demand and comparatively weak Asian interest in more purchases, leaving Europe to bid higher and higher relative to Asia as price signals have failed to result in a sufficient redirection of flows to Europe and balance fundamentals between the two basins. European prices in recent days have instead had to inch closer to prices on Asia-Pacific markets — so those markets' premium is not sufficient to even cover the additional boil-off and return fuel costs — and European values even turned to a premium over Asia last week. This eventually spurred a large number of diversions of laden carriers to Europe through mid-November, which has helped to balance out global supply. Almost 10 carriers laden with LNG from the US or west Africa have been diverted away from routes towards Asia in recent days, and were sailing for European delivery, although it remains to be seen how long lived this change in flows might be, given that European prices softened against Asian values in recent days. Forward rates for fixtures throughout this winter remain close to prompt rates' nadir, and even more ships could come to the spot charter market as more US LNG flows to Europe instead of Asia. This suggests that Europe's need to compete at almost price-parity with Asia — rather than just hold at enough of a discount so that the additional spot freight costs are not covered — to keep enough LNG flowing in its direction may remain, at least in the short-term. But beyond next quarter, together with expected LNG supply increases in the US, carriers tied to short-term winter charters are due to come off-charter as the season draws to a close. And if rates do remain at such lows, owners taking back these ships will eventually be faced with a decision on whether to seek new fixtures or take them into short-term lay-up. LNG carrier deliveries (no. of carriers) ARV charter rates 2019-24 ARV freight rates vs 3-yr avg Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Lower Mississippi draft restrictions lifted
Lower Mississippi draft restrictions lifted
Houston, 11 November (Argus) — The US Coast Guard (USGC) removed draught restrictions from the lower Mississippi River on 8 November, after several rain washed across much of the Midwestern US. Draft restrictions were completely lifted for north and southbound barges on the lower Mississippi River between Tiptonville, Tennessee, to Tunica, Louisiana. Approximately 2-8 inches of rain were reported in Illinois and Missouri in the last seven days, adding around 14 inches to the lower Mississippi River, according to the National Weather Service (NWS). St Louis, Missiouri was at a high of 11.5 inches above baseline on 11 November, up from a low of -1.5ft on 1 November. The USGC has had draft restrictions in place since August, with the river system receiving a short reprieve in early October after rain from Hurricane Helene poured into the US river system. But low water levels and restrictions returned about two weeks later. Prior to recent precipitation, drafts were restricted to 10-10.5ft for southbound barges and tows could not not be greater than 6-7 barges wide. Northbound barges could not draft greater than 9.5ft, tows could not be more than six barges wide, and only four barges could be loaded. High water levels are expected to remain through November, according to NWS but barge carriers have said that water levels will slip quickly if no additional rain falls along the upper Mississippi River. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil’s iron ore exports rise in October
Brazil’s iron ore exports rise in October
London, 8 November (Argus) — Iron ore exports from Brazil rose year on year in October for the second consecutive month after a slowdown in August, following higher iron ore demand and steel output in China. Exports increased by 5pc on the year to 35.3mn t in October. Exports to China increased by 6pc to 25.9mn t, data from Global Trade Tracker show. Exports to Malaysia, where Vale's facility at Teluk Rubiah is located, remained elevated but steady at 2.3mn t. Exports to Japan jumped from 384,000t to just above 1mn t. Chinese October iron ore imports rose year on year by 4.7pc to 103.84mn t on the back of higher domestic steel demand. Western Australia iron ore loadings in October fell to just above 76mn dwt, from 78.85mn dwt a year earlier, but rebounded in early November. Brazilian exports could increase further this year, with increased chartering in early November for December-loading cargoes. Exports totalled 7.1mn t on 1-8 November, data from analytics firm Kpler show. The Brazil-China Capesize freight rate was $21.65/t on 7 November, up from a recent low of $20.30/t on 5 November, as chartering activity rose significantly on the back of higher demand for iron ore and lower Capesize rates, which fell significantly in October. Charterers have continuously absorbed vessels as they reached the Atlantic since August, keeping overall availability low, as more shipowners moved their fleet out of the Pacific and into the Atlantic in expectation of significant revenues after record-high July exports. In addition, a number of west African vessels have been released back to the market after EGA encountered customs problems in Guinea, according to participants, which has slightly dampened momentum in the Atlantic Capesize market. B Andrey Telegin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Gatun Lake to reach all-time high in Dec: Panama Canal
Gatun Lake to reach all-time high in Dec: Panama Canal
London, 8 November (Argus) — Water levels at Gatun Lake that supplies the Panama Canal will reach an all-time high in December, according to forecasts from the Panama Canal Authority (ACP). This is a significant shift from the start of the year, when water levels were at the lowest January level since 1965 following an extensive El Nino induced-drought in 2023 ( see chart ). ACP expects water levels at the lake to hit 88.9ft on 7 December and then 89ft on 18 December, which if confirmed would break the 88.85ft record registered on 5 December 2022. This time last year water levels were in an 80-82ft range, the lowest on record for the November-December months, which prompted ACP to enforce rigorous transit restrictions that sent shockwaves through LPG and other shipping markets . The change in water levels reflects the transition from El Nino to La Nina, which typically brings more rainfall to Panama. Higher water levels from the onset of the rainy season in May allowed the ACP to gradually lift transits back to full capacity by August . This has helped keep auction prices for transits at the larger Neopanamax locks near initial $100,000 bidding levels — and even outpace demand, with many slots turned away without receiving any bids . Argus ' average weekly auction prices have ranged from $112,900 to $209,389 since July, settling at $136,750 by last week. This is a complete turnaround from a year earlier, when shippers paid as high as nearly $4mn for a single transit. On average, Neopanamax auction prices cost $2.1mn in November 2023. This probably helped support Panama Canal's profits in its financial 2024 year, to $3.45bn from $3.2bn a year earlier despite a 20pc fall in transits because of water-saving restrictions implemented. The ACP said the results reflected strategies such as the "freshwater surcharge, improved water yield through structural and operational upgrades, system enhancements for reservations and auctions, and maritime service operations." Water levels are forecast to gradually decrease again from 23 December with the start of the dry season, which usually lasts by May. By Yohanna Pinheiro Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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