SHIPPING: With strike over, some US ports extending gate hours; container rates fall further

HOUSTON (ICIS)–With the suspension of the strike at US Gulf and East Coast ports until 15 January, carriers are urging customers to use extended gate times being offered by some ports to collect or deliver any urgent containers to terminals.

The International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) reached a tentative agreement on wages late Thursday and will extend the current contract while they continue to negotiate other outstanding issues.

Analysts at freight forwarder Flexport said the relatively short duration of the ILA strike means that the impact on the broader US economy has been limited.

“If the strike had continued into next week, the ripple effects could have been massive,” Flexport said. “While the broader economic impact has been averted, the strike has made an immediate impact on the ocean and air markets.”

The company said that during the strike, bookings to the US East Coast remained open, and they expect them to stay open. The only limitations were rail routings to the East Coast via Los Angeles, but Flexport expects they will soon resume operations as well.

“Early reports indicated that each day of the strike would have added five to 10 days of port congestion,” Flexport said. “If you have urgent cargo, routing via the West Coast on rail or transloading in Los Angeles remains your best option to avoid potential congestion on the East Coast.”

CONTAINER RATES FALL FURTHER, PACE SLOWS
Global average rates for shipping containers fell by 5% this week, according to supply chain advisors Drewry and as shown in the following chart.

But rates from east Asia and China to the US fell at a slower rate, as shown in the following chart.

Rates to the West Coast fell by 4.23% while rates to the East Coast fell by 1.76%.

Drewry was anticipating rates to the US would because of the strike.

But with the strike paused, and because peak season demand was largely pulled forward, it is likely that rates will continue to see downward pressure.

Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets.

They also transport liquid chemicals in isotanks.

LIQUID CHEM RATES STABLE TO SOFTER
The US chemical tanker market was largely stable week over week, with slight decreases seen from the US Gulf to Asia for smaller parcels.

Most market participants were preparing to attend the European Petrochemical Association (EPCA) conference in Berlin, so the market was quiet.

According to a ship owner that will be attending the conference, the market is weak across all trade lanes and will remain soft for the short term.

The ship owner said that the current trend will not change anytime soon as the heightened tension in the Middle East provides a lot of uncertainty.

USG-Asia rates were also pressured lower by the increasing availability of space from outside tonnage entering the market to move larger cargoes. The trade lane is expected to remain weak through November.

Rates on the USG/ARA trade lane have been driven largely by a weaker CPP market which allows that available tonnage capable of offering on the chemical market, thus adding to the availability of spot tonnage.

Additional reporting by Kevin Callahan

Thumbnail shows a containership. Image by Noushad Thekkayil/EPA/Shutterstock