Bulk ocean freight rates fall from highs despite uncertainty

Container rates have climbed higher as Houthi attacks in the Red Sea have caused diversions

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Published: January 17, 2024

Grain is loaded onto ships for export at a port on the Parana River near Rosario, Argentina on Jan. 31, 2017. (File photo: Reuters/Marcos Brindicci)

Glacier FarmMedia –– The Baltic Dry Index (BDI), a major indicator of bulk shipping rates, has dropped sharply over the past month after hitting 18-month highs in early December. Meanwhile, container rates have climbed higher over the same period as attacks by Houthi militants in the Red Sea have caused many shipping companies to divert their vessels.

The BDI settled at 1,360 points on Jan. 15, dropping 59 per cent off the high of 3,346 points hit on Dec. 4, 2023, to trade at its lowest level in four months.

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The BDI is compiled by the London-based Baltic Exchange and provides an assessment of the price of moving major raw materials by sea. The overall BDI includes sub-sectors for the different classes of ocean vessels – including capesize, panamax and supramax. It is often seen as a leading indicator of global economic activity.

A seasonal slowdown, reduced congestion at Brazilian ports and cancelations of some vessels headed from China to North America were all said to be contributing to the declining rates.

While bulk rates have fallen over the past month, container rates have shot higher. Drewry’s World Container Index (WCI), which tracks container rates, was at US$3,072 per 40-foot container on Jan. 11, 2024 – roughly double where rates stood at the beginning of December.

With more and more vessels diverting away from the Red Sea and taking lengthy detours there were reports of some shipping companies quoting rates as high as US$10,000 per 40-foot container from Shanghai to the United Kingdom, roughly quadruple levels only a week earlier.

Canada is at a freight disadvantage compared to its competitors exporting grains and oilseeds into many markets, with lower freight rates helping counter that disadvantage.

About the author

Phil Franz-Warkentin

Phil Franz-Warkentin

Editor - Daily News

Phil Franz-Warkentin grew up on an acreage in southern Manitoba and has reported on agriculture for over 20 years. Based in Winnipeg, his writing has appeared in publications across Canada and internationally. Phil is a trusted voice on the Prairie radio waves providing daily futures market updates. In his spare time, Phil enjoys playing music and making art.

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