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Ocean Freight Rates for Coal

AUTHOR: Darrell Porter
DATE: March 1994

The latest in the series Perspectives from IEA Coal Research assesses the prospects for ocean freight rates for coal in the 1990's.

The report includes an examination of the historic trends in freight rates for coal and aspects of both supply and demand for dry bulk shipping. The economic characteristics of marine transport and its importance to the international coal market are highlighted.

The report contains a description of developments in the dry bulk fleet, ship safety issues and industry structure. It also addresses the effect of recent policies to enforce safety standards both by regulators and through the market. The demand for dry bulk shipping is forecast to 2000 by projecting seaborne trade in iron ore, metallurigical and steam coal, grain and minor dry bulk commodities.

It is concluded that freight rates for coal are expected to increase sharply in real terms over the next few years as world economic activity and industrial production increases. Although rates are expected to increase sharply they will still be below the levels experienced in 1989. The key factors underlying this forecast are the likelihood of a surge in demand for dry bulk commodities in the mid-1990's and a slight expansion of the fleet.