Cargill Inc. plans to close its London shipping office and consolidate some of its operations in Geneva as the freight market slumps to the lowest in three decades.
Shipping “is in its most distressed position since the mid-1980s, a situation that looks likely to continue for the foreseeable future,” Minneapolis-based Cargill said Thursday in a statement. “The reduction in dry bulk demand led by China and the general slowdown in the global economy have led to a significant oversupply in the dry bulk freight market.”
The London office has 10 employees. The ocean- transportation unit manages more than 500 dry bulk vessels and ships more than 220 million metric tons of dry bulk commodities annually. Closely held Cargill is one of the world’s biggest agriculture companies.
Optimism for a recovery in the dry bulk market has waned with China’s slowing economy, Bloomberg Intelligence analysts Lee Klaskow and Talon Custer said this week in a report. The Baltic Dry Index, which aggregates the costs of moving freight via 23 seaborne shipping routes, fell 0.8 percent on Thursday to 355, the lowest since at least January 1985. The gauge includes shipping of dry-bulk commodities such as iron ore, coal and grain.
“Depressed commodity demand and overcapacity may also continue to pressure shipping into 2017,” “ Klaskow and Custer said.