Grain-Ship Returns Top Operating Costs for First Time in 2013

Earnings for Panamax ships, the biggest carriers of grains and coal, exceeded operating costs for the first time this year as a dearth of vessels for hire in the Atlantic area lifted charter rates for an eighth session.
Daily average returns rose 3 percent to $6,626, the highest level since Dec. 14, figures from the London-based Baltic Exchange showed today. Panamaxes are the second-largest ships tracked by the Baltic Dry Index, a wider measure of costs to transport commodities by sea, which gained 0.7 percent to 753.
Stronger earnings for Panamaxes and larger Capesizes helped to lift the index 7.7 percent so far in 2013 even as returns slid for smaller commodity-carrying vessels. The measure’s annual average in 2012 was the lowest in 26 years amid a surplus of ships and slowing global demand for cargoes of raw materials.
“Reports of tighter tonnage supply in the Atlantic” drove Panamax rates higher, Oslo-based investment bank RS Platou Markets AS said in an e-mailed report.
Operating a Panamax costs $6,606 a day before paying for fuel, according to estimates from London-based accounting firm Moore Stephens LLP. Returns as gauged by the exchange last exceeded that level on Dec. 14. Panamax earnings are up 20 percent this year and Capesizes gained 38 percent.
Coal Cargoes
The global fleet of 2,312 Panamaxes will haul about 42 percent of the 365 million metric tons of grains to be shipped by sea in 2013 and almost 55 percent of the 1 billion tons of coal, according to figures from London-based shipbrokers Clarkson Plc and ICAP Shipping International Ltd.
Daily average earnings for Capesizes slid 0.8 percent to $6,750, according to the exchange. They last exceeded operating costs estimated by Moore Stephens at $7,758 a day on Jan. 28.
Capesizes need to earn $16,000 daily to break even and Panamaxes require $11,600 according to Pareto Securities AS, an Oslo-based investment bank.
Average returns for Supramax ships gained 0.8 percent to $7,028 a day, narrowing the annual drop to 7.6 percent. Handysizes, the smallest vessels in the index, are down 7 percent this year after a 17th straight decline to $6,138.
Source: Bloomberg