Top Shipper Warns Commodity Freight Rates About “To Go Parabolic”

Similar to container rates, dry bulk shipping rates are poised to move higher on limited vessel capacity and robust demand, according to Genco Shipping President and CEO John Wobensmith, who spoke with Bloomberg.

“I think rates can go higher from here,” Wobensmith said. “You do get to a point, and you’ve seen this in containers, where you hit a certain utilization rate, and you start to go parabolic on rates. I think we’re getting close to that period.”

He said, “fundamentally, you’ve got demand outstripping supply growth,” adding that freight agreements are above $20,000 for 1Q, a level not seen seasonally in a decade.

More than 5 billion tons of commodities, such as coal, steel, and grain, are shipped worldwide in bulk carriers in a given year. A move higher in the Baltic Dry Index (BDI) indicates increasing commodity demand on top shipping lanes. – READ MORE

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