At the start of 2001 most shipowners took a moderately bullish view of the short-term outlook for freight rates. Those for Panamax vessels on major grain shipping routes were already well above the corresponding levels of a year earlier. Demand also was stimulated by large requirements of iron ore for steel manufacturers in Far East Asia, but this support was forecast to decline in the second half of the year. The factor most likely to curtail rate rises, especially in the Panamax sector, is the large number of new vessels expected to enter service in the coming months.
The trend of rates was therefore strongly influenced by the growth in "spot" tonnage.
Large harvests of maize and soyabeans in both Argentina and Brazil are expected to result in an upsurge in exports. A significant proportion of these shipments could consist of non-GM beans and products, which are specifically requested by some buyers in western Europe and Far East Asia.
It was uncertain to what extent outbreaks of foot and mouth disease in different regions could affect normal trade patterns. Any decline in demand for grain might result in a rise in import requirements of meat. A loss for the dry bulk sector might represent a gain for "reefers", or refrigerated vessels.
The Baltic Dry Index (BDI) measures the movement of representative rates in the dry cargo sector. At the beginning of the year it stood at 1599. By mid-February it had declined to 1455, but recovered to 1508 at the end of March.