(MarketWatch – Adam Johnston)
Soft ocean freight rates, which hit 25-year lows in early February, are helping cut into Canada’s grain freight disadvantage with some of its competitors, said industry participants. The Baltic Dry Index, which is used as a guide for global shipping rates, is sitting at 715 points, up from a twenty-five year low of 647 points Feb. 3. However, that’s still well below the 2011 high of 2,173 points in mid-October and the 2008 peak of 11,793 points.
David Przednowek, manager of marine logistics with the Canadian Wheat Board, said the softening of ocean freight rates has been beneficial for Canadian grain shippers. Transporting grain from Canada to many global areas, including Asia, takes more time, in comparison to moving it from Australia. However, softer shipping rates have narrowed the freight disadvantage, making it more competitive for Canadian grain distributors, he said.
Trevor Lavender, president of the Summit Maritime Corporation in Montreal, said much of the dramatic downward trend seen in ocean freight values is due to the large supply of ships. The lack of seasonal demand due to the Chinese new-year holiday, has also weighed on freight rates recently. Read more here.