Dry Freight Market and Transportation of Goods

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The dry market freight indences are the transportation of goods from one place to another by road, ship, air is freight. The dry market freight indences mean goods transported in bulk for larger use of a region, countries situated widespread throughout the globe. As the human population increases the demand for food, housing, clothes, daily use items, industries, mines, all useful items for human use are in demand according to the population, area, development and nature of the countries situated in various parts of the world. The demand and supply chain is fulfilled by transportation of goods to respective destinations.

The freight market is connected with several factors, such as politics of the areas, weather, catastrophe, and wars. The basics demands driven by commodities and understanding major commodities being transported around the globe and its market is of vital importance in analyzing the freight markets. (Alizadeh & Koekebakker 2007)

There are three factors which takes control the freight market:

The first factor is FLEET SUPPLY (TRANSPORTING SHIPS) —There are different types of ships available to transport the goods. The Ships delivered from the ship yards.The number of ships which are scraped due to lost of sea worthiness. The routes where ships are taking. The distance difference affects the quantity of ships available.
The second factor is TRADE DEMAND; demand for freight, is the trade demand increasing or declining? The countries economies are healthy or sick. Is the recession a key factor? The freight market is directly related to a country’s Industrial growth and food production is the grain produced by the country is in abundance, and is capable of exporting surplus grain produced inside the country. If there is surplus grain then grain export is most possible commodity. The industries are generating commodities which are in surplus after supplying to the local demands or the technological advanced factors creates machineries and commodities which are in demand in other countries. These machinery commodities can also be exported to various countries.
The third factor is MARKET SEGMENT, The demand of goods side of forty to fifty percent is known in a timely manner. The market opinion will have a great impact on the things, just as much as the underlying demand and supply chain. (Collins 2006)

The dry bulk market has weakened recently due to global melt down and recession worldwide. The Dry bulk market demand has fallen.

The total sea borne dry bulk trade is 1.8 billion tonnes approximately.

There are various problems faced in this trade. There is a reliable factor where in it is found only sixty percent of the dry bulk trade is actually monitored strictly. The information received in time is only fifty percent. The dry seed, oil seeds shipper’s major interests are hampered due to these above said factors. The ships below 40,000 dead weight tons which mostly carry oil seeds products get effected in such cases. These types of ships account for one fourth of total dry bulk fleet. (Alizadeh & Koekebakker 2007)

Steel related products (Iron ore, coking coal, steel, scrap etc.) trade collectively account for almost half of all sea bore dry bulk freight business , thus the ship owners have keen interests on steel industry, irrespective of whatever cargo they are carrying as on today. Iron ore and steel related production growth continues to grow in healthy proportion. This area is supported by the largest populated in the world China, which also produces the largest iron ore. Unfortunately, the iron ore is of low-grade type, thus the demand for high-grade iron ore increases and China had to import in bulk, in large quantities. About one decade ago, China used to import approximately 18 million tonnes, today their import figure had almost reached approximately 100 million tonnes is also increasing. About one decade ago, Japan used to import approximately 127 million tonnes, today Japans demand is almost the same no significance. (Collins 2006)

This only proves the shipping demands changes very fast. The very big importers in that region are Taiwan and South Korea. Their demands have also increased.

There is slow down in demand in Europe. There is a significant change in the last ten years, the trend of Bulk trade. The Asia Pacific region and Europe if we compare the dry bulk trade the Asian countries is approximately took 50 % of the total bulk trade around the world , where as Europe took 37 to 43 % approximately which remains almost constant for Europe. (Randers & Göluke 2007) The American and Australian continents share the rest of the World bulk trade.

The Grain trade is bad all over the world. The global weather-changing pattern and grains harvest in countries around the globe are regarded as exorbitant. (Srinivasan & Bass 2004)

Surplus is not very much significantly found. The seasonal variations, bad weather, drought, earth quake, tornadoes, tsunamis, forests under fire, are some of the major reasons for this impact. The International Grains Council statistics of July 2002 to June 2003 had shown wheat trade had fallen from 2 million tons to 104 million tons. The food products like coarse grain, Soya beans, and meal trades have fallen down to an abnormal level. (Collins 2006)

The demand for wheat and other food products to Latin American countries like Brazil, Argentina and Venezuela may likely to be increased. The coarse grain trade remains dominated by Japan with its annual requirements of approximately twenty million tons.

The Coal is the single largest bulk trade accounting for approximately 630 million tonnes per year, and remains highly lucrative commodity to match the demand outlook for the dry freight bulk market indexes. The fact that coal trade growth may slow down due to alternative sources of energies being explored world wide, there is a simple economics (cheaper , albeit more distant supplies) and growing environmental concerns which perversely led to an expansion in Coal trade at the expenses, in many cases, of domestic industries. (Alizadeh & Koekebakker 2007)

The Global bulk trade continues to expand. Fleet supplies will gradually come to balance. However, the global weather is fast deteriorating. All commodities were be transported for the development purposes of all mankind, but the saddest part, due to global warming and unpredictable climate changes around the world, the food grains movements will continue or will totally stop is a major concern for all human beings. (Kavussanos & Nomikos 2006)

References

Alizadeh, AH & Koekebakker, S 2007, ‘Predictive power and unbiasedness of implied forward charter rates’, Journal of Forecasting, vol. 26, no. 6, pp 385-403.

Collins, N 2006, The Essential Guide to Chartering and the Dry Freight Market, Clarkson Research Studies, London.

Kavussanos, MG & Nomikos, NK 2006, ‘Futures hedging when the structure of the underlying asset changes: The case of the BIFFEX contract’, Journal of Futures Markets, vol. 20, no. 8, pp 775-801.

Randers, J & Göluke, U 2007, ‘Forecasting turning points in shipping freight rates: lessons from 30 years of practical effort, System Dynamics Review, vol. 23, no. 2-3, pp 253-284.

Srinivasan, S & Bass, FM 2004, ‘Cointegration analysis of brand and category sales: Stationarity and long-run equilibrium in market shares’, Applied Stochastic Models in Business and Industry, vol. 16, no. 3, pp 159-177.

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Dry Freight Market and Transportation of Goods

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