The weak U.S. dollar and the relatively tight supply of Handy-size vessels meant bulk freight rates out of the U.S. Gulf remained pretty buoyant throughout 2010. Liner cargo rates also increased as export volumes improved, particularly mining machinery, where demand grew on the back of strengthening commodity prices.
Unfortunately, liner shipping is seldom perfectly balanced in both directions, and the relatively weak dollar and soft demand in the U.S. steel industry meant our trade, as I’m sure was the case with most trades to and from the U.S., was heavily imbalanced with light inbound sailings. We expect 2011 to be another tough year for imports, particularly for steel and raw materials for the steel industry.
Durban, South Africa, was recently awarded the unenviable title of most expensive port in the world by the Ports Regulator in a study involving 12 ports. The sharp increase in port costs, combined with poor production and increased congestion in Southeast African ports, is a serious problem facing carriers and shippers in our trade.
With crude oil consistently holding above $80 per barrel in recent months, high bunker prices look set to continue into 2011. Carriers will try to conserve bunkers by slow-steaming and rationalizing port calls, while shippers can expect to face high Bunker Adjustment Factor surcharges for the foreseeable future.
Despite the challenging market conditions, we are optimistic the market recovery will continue in 2011.