Hiring rates for largest carriers touch record highs

Hiring rates for largest carriers touch record highs

Rates for hiring the largest carriers used to transport coal, iron ore and other dry goods may extend last week’s increase to a record on demand to move cargo across the Pacific.

The Baltic Capesize Index, a measure of rates for that class of vessel on different routes around the world, gained 1.2% to 10,715 on 31 August, according to the London-based Baltic Exchange. It has been setting daily records since 28 August. A capesize bulk carrier hauls 175,000 tonnes of goods.

Demand for steam coal, iron ore and steel, led by China, the world’s fastest growing major economy, and port congestion have pushed freight rates higher. The US harvest for corn and soya bean, which starts in October, is expected to raise demand for bulk carriers in the coming weeks.

“For the time being, it’s the Pacific basin that is pushing the market most upwards," said Oslo-based shipbroker Pareto Dry Cargo AS. The shipping rate for a tonne of cargo to China from Tubarao in Brazil on a capesize vessel rose 4.7% last week to a record $66.30 (Rs2,718.3) on 31 August, according to the Baltic Exchange.

The time charter daily rate for a capesize bulk carrier rose 1.1% to $127,033 on 31 August, the exchange’s data showed. Time charter refers to the hiring of a vessel for an agreed period of time where the shipowner is paid per day and is responsible for operating the vessel and paying for expenses such as crew and vessel repairs while the charterer bears the cost of fuel, port charges and delays at harbours.

The Baltic Dry Index, an overall measure of commodity-shipping costs on different routes and ship sizes, rose 1.5% to 7,702 on 31 August, according to the Baltic Exchange. It’s the fourth straight day the index closed at a record. The measure rose 5.8% all of last week.

“The dry-bulk market is indeed in a super cycle with demand coming from China and India," according to Alex Harkess, director for dry-cargo chartering at Clarkson Asia Pte in Singapore. “There is a new global economy that’s demanding so much resource and transportation by sea."

Dry-bulk trade rose to 1.16 billion tonnes in the first half of the year, up 7.2% from a year earlier.