The super-charged rally in commodity prices has made shipping more expensive than any time in the past decade, reviving the fortunes of an industry that was on its knees just a year ago. The scale of the boom, with red-hot demand almost everywhere on the back of a broad economic recovery and vast stimulus programs, has stretched global shipping as products such as soybeans and logs compete with traditional cargo mainstays of coal and iron ore. The surge also highlights the pressures the commodities industry is under to meet that growth. “Industries are restocking both finished products as well as raw materials, which is boosting freight movements. Volumes are above pre-pandemic levels,” said Burak Cetinok, head of research at Arrow Shipping Group Ltd. “Over the last 12 months, the demand for bulk carriers was primarily driven by China, but now the rest of the world have joined in with a strong rebound in demand for industrial commodities.” The surge in commodity costs is fanning fears of inflation, and questions are building around the need for a response from central banks. Should commodities start to cool, shipping prices could be one of the first indicators, according to Colin Hamilton, an analyst at BMO Capital Markets. “We see freight as an important market to watch for any signs of demand destruction amid high prices,” Hamilton said.
Sources: Bloomberg/Datamar News