MILAN, Jan. 25 (Class Editori) — Container shipping by sea is setting unprecedented records. The Freightos Baltic Index recorded a surge from 2,000 dollars in November to ship a 40-foot container (FEU) from Asia to Northern Europe, to over 7,800 dollars in January. Similar levels were recorded for shipments to the Mediterranean, with a current price of over 7,900 dollars. Globally, the index shows that the y-o-y average cost of shipments rose from 1,549 dollars at the end of January 2020 to 4,071 dollars on average today, a 162.81% increase.
Surveys by analyst firms such as Xeneta and Platts Container have even reported rates exceeding 10,000 dollars. According to The Financial Times, the shortage of containers behind the price rise is due to the thousands of containers that got stuck between Europe and the United States during the lockdowns in the first half of 2020, thus obstructing global logistics by blocking hundreds of ships in ports, with a restart in the second half of the year that then led to the current price surge.
An analysis published by the research company Sea-Intelligence and reported by MF-Milano Finanza has partly scaled down this reconstruction: after the initial reduction in load capacities in the first half of the year, ships with higher load capacities went into service to compensate for the cancelled departures. Sea-Intelligence estimates a 30% y-o-y increase on routes between Asia and the West Coast of North America, with a recovery between August and October for routes to Europe and the Mediterranean.
In January, an unexpected peak has also been reached by the transportation of raw materials with dry bulk cargos carrying commodities such as coal, iron ore or seeds. The S&P Global Cape T4 index, which measures rates for bulk carriers over 150,000 tons, called Capesize and characterized by their large size that does not allow them to pass through the Panama and Suez canals, reached a quarterly record of 23,908 dollars per day on January 12, against seasonal levels usually much lower in previous years. Bad weather and atmospheric conditions can cause delays in loading operations, reducing operating capacity and affecting prices. China's interest in the supply of iron ore from Brazil and Australia is driving the sector, and signs of growth for the first quarter may anticipate encouraging results for the rest of the year. According to Peter Sand, Chief Shipping Analyst at the international shipping association BIMCO, "2021 will be a record-breaking year for dry bulk shipping, both in terms of tons and tons per mile, with demand exceeding supply.
However, the issue of overcapacity that has long plagued the industry will not be resolved and is not an obstacle that will disappear just with a new year or because the vaccine is on its way. In any case, what can be noted is China's weight in global dry bulk imports of raw materials rising from 44.7% in 2019 to 48.5% of 2020's market of per-ton miles transported globally.
The trends in logistics and maritime transport may not be immediately accessible, but there are several ETFs that can take the pulse of the sector's performance. The first is the Breakwave Dry Bulk Shipping (BDRY), with 27,4 million dollars in assets under management and a 47.14% growth since the beginning of the year; these data reflect the stunning trend in Capesize ship rates by tracking quarterly futures on specific indices that measure the prices of bulk shipments. More broadly, to keep an eye on transport trends there is the iShares Transportation Average ETF (IYT), which monitors a range of stocks in the US transport sector with 1,66 billion dollars in assets, a 3.1% growth since the beginning of the year and a 14.24% yield in 2020. Two ETFs of the SPDR family are also worth keeping an eye on. The first one is S&P Transportation (XTN), a basket containing 43 different stocks in the transport sector that is the most diversified in the segment.
It has 492,49 million dollars in assets and recorded a 11.73% increase in 2020. The second one is S&P Kensho Smart Mobility, with 170,23 million dollars in assets and up 83.68% in 2020.
(Source:Class Editori)
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