Sea freight monthly review: November 2019

The newly dynamic competitive environment in the Med banana trade was the reason for continuing charter market activity in the large segment, with charterers in Algeria and now Libya keen to source their own fruit rather than rely on traditional supply from the Med banana traders.

This change in dynamics has led to a more active charter market, but that’s pretty much where the good news ends for reefer operators. There has been no material uptick in the Ecuador to Med voyage rate for spot banana cargoes since March 2018, and it’s unlikely there will be for the foreseeable future. Unless that is, there is a crippling capacity crisis caused by a shortage of reefer equipment on the one hand and/or an increase in demand from the South Atlantic squid and Chinese protein importers on the other…

Ahead of the early Chilean grape and stonefruit season, Cool and Seatrade chartered in tonnage to ensure adequate coverage of the trade to the US. Although the social and political situation in Chile was volatile, there had been little-to-no impact on the export of fresh produce. One of the benefits of the unrest for shippers was that peso plummeted to historic lows.

Leading southern hemisphere reefer charterer Zespri closed its season having loaded 44 full charter shiploads and 17,160 reefer containers. For the first time Zespri shipped more Gold kiwifruit than Green, with the final combined total reaching 500K MT-plus.

Aside from the start of the N Cont to N Africa potato season, it was a slow month for the small units. The charter market was affected by a poor fish catch off Morocco and Mauretania, while there was an unusually late start to the Moroccan citrus season. The dramatic reduction in export grade fruit will be felt in all markets and affect reefer and carrier modes alike.

The small vessels also benefitted from demand from a new source. In October India’s Union Cabinet approved the import of 120K MT of onions to improve the domestic supply and control prices that have skyrocketed. India suspended onion exports in September in order to balance supply and demand, but a significant shortfall remains. By the end of the month Indian traders had chartered in 3 reefers and more were expected in December.

Despite the lack of charter market activity and the accumulation of tonnage, operators were able to maintain the rate on the benchmark Mauretania to West Africa voyage close to US$180 per MT. However, in order to maintain a TCE average in the US$0.80c-0.90c bracket once vessels start bunkering with LSFO, this rate will need to rise to offset the increase in cost.

sea freight - spot average november

sea freight - large reefers november

sea freight - small reefers november