FEATURE: After shipping grains, a Capesize is moving logs in a rare move

Singapore — If loading grains on big Capesize ships was unusual, shipping wooden logs on these huge bulkers is an exceptional move by traders in their quest to keep freight costs under check.

Capesize bulkers, predominantly used to move iron ore and coal, left the market agog after a Capesize ship -- the 2013-built, 181,415 dwt MV Cape Pelican -- was reportedly being chartered to load logs from Uruguay's Montevideo port for shipment to North China.

This comes hot on the heels of the 2019-built, 180,000 dwt Capesize ship, the MV Pacific Myra, which is controlled by trading house Cargill, being fixed to load grains from Paranagua and due to reach the Brazilian port on March 27.

Logs are typically moved on the Handysize/Handymax, or Supramax, class bulkers in the 28,000 dwt/38,000 dwt and 57,000 dwt range ships, respectively. Some of the Handysize/Handymax bulkers are specialized log carriers, dedicated to this business.

In recent times, the wide freight spread between the Capesize and the smaller Panamax and Supramax bulk carriers has resulted in charterers trying to hire the larger ship to save on freight costs.

According to multiple industry sources, the Cape Pelican, managed by Zodiac Maritime, which was expected to arrive at the Brazil iron ore loading port by end-March, or early-April, is scheduled to load logs from Montevideo. When contacted, Zodiac declined to comment on the matter.

The freight rate to move logs on the Cape Pelican was reportedly at a lumpsum amount below $4 million for shipping about 90,000 Japan Agricultural Standard, or JAS logs. The freight indicated for the Montevideo to Lanshan route for Supramax and Handysize ships was in the range of $55-$70/JAS.

JAS, developed by Japan's Agriculture and Forestry ministry, is a system used for measuring roundwood and considers the shortest diameter of the log.

The freight rate for a Capesize ship to move 170,000 mt (plus/ minus 10%) of iron ore from Tubarao to Qingdao was assessed at $19.50/wmt on March 11, which showed a Time Charter Equivalent for non-scrubber fitted ship at $15,033/day.

Currently, small bulkers are giving better returns to shipowners compared with Capesize ships. As of March 11, for non-scrubber fitted ships, Platts KMAX 9 Index was assessed at $21,082/day, the APSI 5 Index was at $21,202/day, while the Cape T4 Index was at $17,229/day, though Capesizes carry two to three times the volume.

"It should be known to the market that there has been a rise in usage of Capesize ships for cargoes that would have been loaded by either Panamaxes or Handysize ships, thanks to the strong rates observed for those smaller sizes compared with the Capesize," a shipbroker said, adding that there could be a further push on Capesize freight rates due to the increasing competition from charterers.

"It is interesting to see Capesize bulkers, which are typically mineral carriers, move logs amid the technical challenges," a ship-owning source said.

The source added that Capesize ships are restricted by the cubic capacity of its cargo-holds, especially for log stems. There are also some physical restrictions that are not limited to just the loading and discharging port facilities, but also possible cargo and hold damages by taking on this business.