The closure of US East Coast ports ahead of Hurricane Florence has had no significant impact on dry bulk freight rates so far. However, market participants remain cautious amid lingering uncertainty and supply chain risks.
While port operations grind to a halt and ships moor off shore to await clearance for berthing, the risk to infrastructure has been worrying market participants to a greater extent.
“[It is] pretty serious, hopefully does not damage the infrastructure too much,” a shipbroker said.
The port of Virginia is expected to close Wednesday 12.00 Eastern Time under port condition Zulu, while the main shipping channel will close 6.00 Eastern Time Wednesday and all terminal activities will halt at 23.59 Eastern Time Tuesday under port condition Yankee, according to port authorities.
Under Yankee, vessels seeking to depart must arrange immediate departure and ships seeking to arrive in port should seek an alternate destination, while cargo operations must cease with 18 km/hour winds. Zulu indicated that sustained gale force winds are predicted to arrive at the Virginia Capes within 12 hours, the port authorities explained.
However, with fixing activity lackluster in the transatlantic market over the past weeks, the impact on the Panamax tonnage list is expected to be minimal for the time being.
According to S&P Global Platts cFlow data, there were three Kamsarmaxes currently moored offshore Hampton Roads Shipping Channel, while two Kamsarmaxes and a Panamax were observed sailing away from the Channel in unladen states. A Kamsarmax and a Post-Panamax were inbound to the region, being around a day’s voyage away.
Meanwhile, three Kamsarmaxes, two Post-Panamaxes and one Panamax vessels were originally scheduled to arrive at the Hampton Roads Shipping Channels around Friday, when Hurricane Florence is set to be making landfall in the area. This suggests these vessels are expected to face relatively mild delays in ballast while the storm gradually weakens.
SUPPLY CHAIN RISKS
While tonnage could get temporarily tied up and make matters difficult for some stakeholders, market participants’ fears were more centered around damage to on-shore infrastructure.
“If this means vessels will stay outside and wait, it is indeed not negative for the market,” a second shipbroker said. “But if it means vessels being ‘freed up’ on arrival and being [open] spot in the market, then it is not good.”
Any damage rendered to the infrastructure in the region could disruptively impact the coal supply chain from the production sites to the ports, which consequentially could take a toll on the demand for dry bulk vessels.
A shipowner remained optimistic and expected the coal trade to slowdown briefly and to subsequently gain momentum when the storm subsides, yet anticipated the slowdown to be longer in case of infrastructure damage.
“Everything hurts shipowners,” he said.
The Port of Virginia includes three coking coal export terminals: Dominion Terminal Associates and Kinder Morgan’s Pier IX — which are both in Newport News — and Norfolk Southern’s Pier VI in Norfolk.
Hurricane Florence is packing winds of up to 140 mph and is at Category 4, close to Category 5 strength, and is due to make landfall south of Hampton Roads in North Carolina Thursday.
The Hampton Roads-to-Rotterdam coal freight assessment for 70,000 mt requirements was assessed stable Tuesday at $12.50/mt. Time charter rates on Kamsarmaxes for transatlantic round voyages, in recent trading sessions, have been heard hovering at around $14,500/day on a DOP UK Continent basis.
Source: PlattsPrevious Next
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