Dry bulk shipping refers to the movement of significant commodities carried in bulk: – the so-called major bulks (such as iron ore, coal, grain), together with ships carrying steel products (coils, plates and rods), lumber or log and other commodities classified as the minor bulks. Other cargo ships include OBO’s (ore/bulk/ ore carriers or Combination Carriers), which are vessels able to trade alternatively dry and wet cargoes.
Dry bulk logistics
Whether it’s coal to China, wheat from Wyoming or iron ore in India, dry bulk commodities keep the world’s machinery running, the wheels of industry turning and people fed. We have been handling dry bulk commodities and vessel charters since the 2010. Today, we have partnered with a leading dry cargo agent active in diverse dry bulk markets, providing unparalleled expertise and experience in delivering professional ship agency services at any location or port around the world.
The Ins and Outs of Ship Chartering
When a ship is taken on rent, it is known as ship chartering. Just as people take an apartment or a car for rent, some people may rent a ship based on their requirements. It could be to transport passengers or cargo. Renting a ship is known as ship chartering and it begins with the shipowner and a second party entering into an agreement. In shipping parlance, this agreement is known as a charter party. The party that rents out the ship is the shipowner and the second party who is taking the ship on rent is known as the charterer. As we can see here, there are three parties in the process of ship chartering: – the shipowner who owns the vessel being rented, – the charterer who requires the ship on rent, and – the shipbroker who has helped to bring them together.
Charterparty The charter party is a contract between the shipowner and the charterer. It states the responsibilities of both these parties with regard to the ship charter. The charter party must be detailed and cover all aspects of the charter, especially points like re-renting of the vessel by the charterer, the type of cargo to be loaded on the ship, and ports of call. In ship chartering, all the parties involved should be aware of the various details that go into the making of a successful charter party or fixture. The shipowner, as well as the charterer, must be aware of the background of the other, their financial standing, and business reputation. Just as the shipowner must know the type of cargo that is to be carried on the ship and its date of sailing etc. the charterer should be aware of the cargo-handling capacity of the vessel and its flag. It would do the shipbroker good if he knew all these details before approaching a prospective client.
Vessels chartering
Through our partnership agreement, we offer a wide range of ships and cargo brokerage related services to a diverse international clientele of charterers, operators, ship owners, shippers and receivers trading in dry bulk market. Our shipping business is involved in transportation of grains, oils, seeds, fertilizers, steels, iron ore, coal, raw material, sugar, etc.
Vessel type we operate: handysize/smx/pmx/capesize
Operation routes: domestic coastal, SE Asia and Far East, U.S. Gulf, Australia, W. Africa, N. Africa and Middle East (Mena), Persian Gulf, Black sea and Med, Baltic sea and other areas.
Our Chartering division works closely with ship owners to charter vessels for our customer’s shipments (both part and full cargo) by checking and planning all technical, legal and commercial aspects. In doing so, we are able to help to minimize any risk surrounding the transportation of our customer’s consignments, by supplying them with transport that is fully compliant with international standards.
We can offer flexible methods such as TC/TCT/VC/BBC according to customer’s specific requirements and has also established extensive, long-term and friendly partnership with main ship owners at home and abroad.
Moreover for ship-owners, charterers and/or operators of the vessels we also provide marine survey like: 1) On/off hire survey, bunker & condition survey 2) Damage inspection 3) Loss prevention inspection 4) Pre-purchase survey (Ship & Cargo) 5) Marine casualties, collisions, grounding, stranding, pollution survey 6) Supercargo service
Shipping market outlook | Container vs Dry bulk: Q2 2022
As of writing (30 May 2022), Capesize rates dropped significantly and negatively impacted sentiments of smaller vessels. With an unexpected drop in freight rates, many long-position players either in FFA or physical have no options but to cover their position in the FFA market or secure cargo to near-term position, triggering more downside pressure in the short-term. However, regardless of the short-term sentiment-FFA driven rates movement, we believe that the fundamental supply and demand balance will eventually determine the market.
S&P Global Market Intelligence forecasts dry bulk rates to remain stable in the coming years with limited supply and stable growth in trade—more bullish in the near-term and bearish for medium-term. Dry bulk demand growth is expected to decrease to 0.2% in 2022 and settle at 1.7% in 2023, compared with 2.2% in 2021, while dry bulk fleet growth will slow to 2.8% in 2022, 2.2% in 2023, and 2.4% in 2024, compared with 3.4% in 2021.
In this context, S&P Global Market Intelligence Freight Rate Forecast models predicts Baltic Dry Index (BDI) to increase in the early third quarter compared with the second quarter with the restocking demand from Europe before the Russian coal imports ban and seasonal recovery in shipments as well as continued strength in commodity prices. However, the dry bulk earning is expected to fall about 20-30% on the year to average about 2,500 - 3,000 points in second half 2022 with several downside risks, including the major supply-side impact from the Ukraine-Russia conflict and demand-side impact from weaker mainland Chinese economy and stronger domestic coal production and softening container market.
Specifically on the container market impact, we have consistently argued that as long as container freight rates remain high enough to capture part of general cargo vessels (multipurpose) and open hatch cargo vessels share in the container sector commercially, small geared bulker rates are expected to be supported, specifically for the backhaul routes. That is why our major assumption for dry bulk demand and supply has been heavily linked with the container market outlook.
Currently, we assume container freight rates will also face correction and decline by 20-30% to average about $6,000-7,000 per box (FEU) in the second half of 2022 from an average of about $9,000-10,000 per box (FEU) over the same period last year. The softening of container trade growth in response to high inflation rate, endemic consumer pattern, and supply side pressure with heavy investment in new buildings, as well as reduced congestion with the easing of COVID-19 restrictions will be major downside risks in the second half of the year, specifically after the third-quarter peak season is over.
Another lockdown in mainland China, slower than expected economic growth with continued high inflation, and a lack of stimulus would be a major downside risk, while continued strength in container freight with high congestion and limited infrastructure, as well as lower-than-expected domestic coal production in mainland China and earlier-than-expected reopening of Ukrainian sea ports would be a major upside risk in our forecast.