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Ship Rates Gain Most in Year on South America Grain Season Start

Earnings for Panamax ships carrying coal and cereals in the Pacific Ocean had the biggest weekly gain in a year as vessels departed the region for South America’s East Coast grain season that starts next month.

Rates gained 11 percent to $5,748 a day in the Pacific, taking this week’s advance to 50 percent, the biggest in 12 months, according to data from the Baltic Exchange, a London- based freight assessor. The advance lifted average earnings for the vessels globally by 4.1 percent to exactly the same amount. The Baltic Dry Index, a wider measure of commodity shipping costs, gained 1 point to 748.

The increase in rates reflects “the recent oversupply of tonnage beginning to ease as more vessels ballast to East Coast of South America in readiness to cover March grain orders,” ICAP Shipping International Ltd., a London-based broker, said in an e-mailed report late yesterday. Ships sailing without cargoes are said to be in ballast.

The fleet of 2,309 Panamax vessels will haul about 42 percent of the world’s 365 million metric tons traded in grains and soybeans in 2013, the most of any vessel size, according to data compiled by Bloomberg from ICAP and Clarkson Plc, the biggest shipbroker. Average rates for Panamaxes gained in eight of the past nine years during the months of February and March, exchange data show.

Brazil exported 32.9 million tons of soybeans in 2012, the second-highest on record, with 76 percent of the total shipped from March to July, Brazilian government data show.

Still Losing Money

The Panamax earnings are 13 percent lower than operating costs, estimated at $6,606 daily by Moore Stephens LLP, a London-based accounting and advisory company. The expenses exclude fuel costs.

The Panamax fleet, accounting for 26 percent of commodity- carrying vessel capacity, expanded by 13 percent last year, the second-fastest rate in almost three decades, reducing earnings to the lowest in records going back to 1998, Clarkson data show.

Average earnings for Capesize ships, the largest tracked by the exchange, fell by 2.3 percent to $7,344 daily, while Supramax vessels that carry minerals and grains declined 0.3 percent to $6,995. Handysizes, the smallest, were 1.1 percent lower at $6,281 daily, according to the exchange.

To contact the reporter on this story: Michelle Wiese Bockmann in London at mwiesebockma@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net

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