Wednesday, September 28, 2011

Bulk Freight Picks Up and Continues To Baffle Shipping Analysts

Baltic Dry Index Climbs Despite Stock Markets - But What of Container Shipping?
Shipping News Feature

UK– WORLDWIDE – Despite the recent slump in stock markets the Baltic Dry Index seems to be retaining the steady improvement in bulk freight rates we have witnessed in the past month or so. Closing at 1927 yesterday means the BDI is at its highest point since before Christmas last year, although still far from the heady days of mid 2008 shortly after which it slumped to less than half its current value.

Last week Diana Shipping Incorporated, which specializes in large ocean cargo carriers, announced the latest rates it has secured for its two Newcastlemax dry bulk carriers, the MV Los Angeles and the MV Philadelphia, both of which are currently under construction. The client, EDF Trading Limited, London, has signed up for around 4 years for the ships chartering each at a daily rate of $18,000.

EDF Trading operates an integrated ocean freight and inland logistics business managing the supply chain requirements of a variety of dry bulk commodities including coal, grain products, iron ore and steel products, alumina, cement and fertilizer for its clients.

The Newcastlemax class dry bulk carriers are each of approximately 206,000 dead weight tonnes and the charters are expected to commence upon delivery of the Los Angeles and the Philadelphia to Diana from the shipbuilding yard, scheduled for February 2012 and in April 2012, respectively. The time charter contracts of the two vessels are expected to generate approximately US$48.6 million of gross revenues for the minimum scheduled period of the charters.

Diana also completed the drawdown of US$15 million from a loan facility with Emporiki Bank of Greece S.A. through a wholly owned subsidiary the funds were to finance the acquisition cost of the MV Arethusa which was delivered to Diana in July.

With container rates under pressure as oversupply of vessels begins to affect that section of the shipping industry, the constant switch of fortunes which is created by the fundamental difference between the two trades, i.e. fixed unit tariffs against spot hire/charter rates, takes yet another turn continuing to puzzle many forecasters.

Photo: View forward across the deck of the Diana bulk carrier Calipso whilst docked.