The fastest expansion in world trade in three years is clogging up ports from Australia to Brazil, driving a 32 percent jump in charter rates by December.

The rate for leasing capesizes, boats three times the size of the Statue of Liberty, will average $39,000 a day in the fourth quarter, from $29,649 now, according to the median in a Bloomberg survey of 11 analysts. Higher costs for the ships, the biggest part of the commodity fleet, will bolster returns for Mitsui O.S.K. Lines Ltd., Nippon Yusen K.K. and China Cosco Holdings Co., analyst forecasts compiled by Bloomberg show.

While the 14 percent decline in world trade last year caused prices to plunge as much as 76 percent from their peak in June, increasing demand for coal now means 55 ships are waiting to load at Newcastle in Australia, up from 17 a year ago. Lengthening lines at the iron-ore ports of Tubarao in Brazil and Qingdao in China also reflect a recovering global economy and accelerating demand for raw materials.

"Once congestion is really taking a grip, you can have 12 percent of the fleet stuck in ports," said Philippe van den Abeele, London-based managing director of Castalia Fund Management (U.K.) Ltd., which trades freight derivatives.
Charter rates "will improve irrespective of the number of ships out there," he said.

Eoin Treacy's view The Baltic Dry Index remains in a ranging, uptrend and has now pulled back to test the progression of higher reaction lows. However, a sustained move below 2000 would be required to suggest a lengthier period of base formation extension and offset continued potential for higher to lateral ranging. The decline in shipping rates and subsequent volatility in prices has contributed to the underperformance of shipping companies relative to other stock market sectors leveraged to global growth. This is beginning to change and shipping companies from one country in particular are outperforming their peers.

Danish shipping companies continue to dominate their sector. Maersk has sustained the break above DKK40,000 in what has, to date, been a rangy uptrend. A sustained move below DKK35,000 would be required to question scope for further upside. D/S Norden failed to sustain the upside break in January and has now pulled back to test the medium-term progression of higher reaction lows. A sustained move below DKK200 would likely signal a lengthier period of base formation extension is unfolding.