Major ports are suddenly clogged and backed up, priming both coal and shipping exchange traded funds (ETFs) for a spike in 2010.

Rail links from coal minds to major ports can’t cope with the volume of traffic, which could ultimately result in an increase in coal prices in 2010. As the global recovery gets into full swing next year, the trading intensity will increase, putting more pressure on ports, mines and coal prices, explains Jonathan Saul and Jackie Cowhig for Reuters. (Other industries set up once the global recovery begins).

Major setback can be seen in:

• Clogged rail links from coal mines to ports in major exporters Russia, South Africa and Australia are failing to cope with the volume of traffic. This may put upward pressure on coal prices.
• Strong coal demand in Asia, led by China and India, will push European delivered coal prices up to $100 a tonne by June from $70 now, according to Bank of America Merrill Lynch. (What’s giving coal its staying power?)
• Shipbroker SSY estimated the average waiting time at seven of the largest Australian coal ports on its east coast had risen to 13 to 14 days from six to seven days in April.
• Port congestion in China and Brazil as well as Australia has tied up large numbers of capesize and smaller panamax vessels this year, meaning there is a smaller number of available ships. In turn, freight rates will remain higher.

For the medium term, stronger coal prices are expected because of increased demand from developing China and India. In shipping terms, there could be a huge amount of demand and that will ramp up congestion at ports particularly on short-term cycles, which could drive freight rates, says Will Fray, shipping analyst with London-based consultants Maritime Strategies International. (Why shipping ETFs are worth your watch).

For more stories about coal, commodities or shipping, visit the category.

• Market Vectors Coal ETF (NYSEArca: KOL): up 131.2% year-to-date

• PowerShares Global Coal (NYSEArca: PKOL): up 127% year-to-date

• Claymore Delta Global Shipping (NYSEArca: SEA): up 27.4% year-to-date

Tags: Commodity ETFs, KOL, PKOL, SEA, Sector ETFs, Transportation