Shipping & Logistics Monthly Report: Nov’14 :: ICICI Securities, link

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Shipping & Logistics Monthly Report: Nov’14
• The Baltic Dry Index (BDI) improved ~34% MoM to 1428 level
in October 2014 after declining ~7% MoM in September 2014.
The rates were held high on account of iron-ore movement
from Brazil to Asia. Also, coal import by India and higher grain
cargo movement in the Atlantic region supported freights.
Supramax and Handysize segment rates softened 15% and
12% MoM due to lower steel output in China (2% decline
MoM), together with a decline in nickel and Bauxite ore
haulage. Going ahead, rates are expected to remain range
bound as cargo growth remains discreet

• The Baltic Dirty Tanker and Clean tanker index posted growth
of ~30% MoM in October 2014. The tanker segment was up
on account of higher volume of crude and refined shipments.
Consequently, VLCC and Suezmax segments rates posted
strong growth as better fleet management helped to maintain
rates

• Railway passenger earnings for October 2014 improved ~7%
whereas goods earnings increased nearly 12% MoM. On YTD
basis, passenger earnings increased 16.5% YoY to
| 24717 crore whereas goods revenues rose 11% YoY to
| 57647 crore. Earnings from iron ore declined the most by
24% YoY whereas that from coal and Exim containers was up
36% and 14%, respectively, on a YoY basis

• Container volumes at major ports rose ~7% YTD and 11%
YoY in October 2014 to 652000 TEUs. For Q2FY15, container
volumes increased 10% YoY to 2016000 TEUs. JNPT, which is
the largest container port of India saw container volumes
increasing 10% YTD to 2601000 TEUs while Chennai port
container volume grew 5% to 922000 TEUs
Outlook
Dry bulkers
Though Chinese iron-ore inventory and steel output declined ~2% and
3%, respectively, growth of grains cargo in the Atlantic region and iron
ore cargoes from Brazil to Asia helped freight rates. Going ahead, the
declining growth in the Chinese economy may send jitters through the
shipping industry. Further, we expect rates to remain frail as fleet addition
remains strong at the previous year’s level. Total ~20% of the current
capacity is expected to be added by CY16, which will weigh negatively on
freight rates as well as asset prices.
Tanker
Tanker segment charter rates, especially in the VLCC segment, posted
spirited growth after remaining subdued in September 2014. The segment
as a whole, posted growth as demand outstripped supply. Going ahead,
the early severe winter in the US is expected to keep demand for crude
high, thereby supporting charter rates.
Offshore vessels
Drillship utilisation continues to decline nearly 200 bps in October 2014
whereas jack-up and semi-sub utilisation showed traction, posting growth
of ~200 and 300 bps MoM to 84% and 87%, respectively.

LINK
http://content.icicidirect.com/mailimages/IDirect_FreightForward_Nov14.pdf