LOGISTICS: Asia-South America container rates surge as rates on other trade lanes plummet

HOUSTON (ICIS)–Costs for shipping containers from Asia to South America are soaring while rates are plummeting along the other major trade lanes and Maersk will resume transits through the Panama Canal after administrators said they expect to be back to normal in 2025, highlighting this week’s logistics roundup.

ASIA-SOUTH AMERICA CONTAINER RATES
Rates for shipping containers from Asia to the US and Europe continue to fall, but rates from Asia to South America are spiking, according to data from ocean and freight rate analytics firm Xeneta and as shown below.

Market participants said space along the Asia-South America route has tightened as China is exporting a lot of electric vehicles (EVs) to Brazil.

A market participant told ICIS that Chinese automaker BYD has booked more than 10,000 containers to ship EVs to Brazil in April.

Autos are typically transported using roll-on, roll-off (RoRo) ships that are designed to carry wheeled cargo.

But the surge in EV imports from China has taken up most of the RoRo capacity, forcing China to send autos in containers, which is more expensive.

A 20-foot shipping container can hold one or two vehicles, and a 40-foot container can hold up to four standard-sized cars, according to IncoDocs, a shipping solutions provider.

ASIA-US CONTAINER RATES FALL
Rates from east Asia and China to both US coasts continue to fall, along with rates from Asia to Europe, as shown in the following charts.

Asia-US rates from online freight shipping marketplace and platform provider Freightos were largely steady this week, suggesting to the company’s head of research that rates might be nearing a floor.

Judah Levine, head of research at Freightos, said if diversions continue into the Q3 peak season months, shippers can expect rates to increase relative to this floor.

STRAIT OF HORMUZ
Global shippers are watching the situation in the Gulf of Hormuz after Iran’s Revolutionary Guard Corps (IRGC) seized a container ship operated by Mediterranean Shipping Co (MSC) near the Strait.

“If attacks like this one continue, broaden, or Iran moves to completely close the strait, Middle East container flows would feel the strongest impact,” Levine said.

A closure would see ports in Kuwait, Iraq and most of the United Arab Emirates (UAE) become inaccessible.

Saudi Arabia, with access to their Red Sea port access already challenged, would see their Gulf port access cut off as well.

“These disruptions would also impact container hubs in India some of which are part of services that connect south Asia and the Middle East,” Levine said.

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), which are shipped in pellets.

They also transport liquid chemicals in isotanks.

PORT OF BALTIMORE
The Unified Command (UC) continues to remove containers from the Dali and clear wreckage from the collapsed bridge at the entrance to the Port of Baltimore.

The US Army Corps of Engineers (USACE) expects to open a limited access channel 280 feet wide and 35 feet deep by the end of April, and are aiming to reopen the permanent, 700-foot-wide by 50-foot-deep federal navigation channel by the end of May, restoring port access to normal capacity.

Source: Key Bridge Response 2024

LIQUID CHEM TANKERS
US chemical tanker freight rates assessed by ICIS were stable to lower this week with rates for parcels from the US Gulf (USG) to Rotterdam and the USG to Brazil unchanged.

However, rates from the USG to Asia ticked lower and all other trade lanes held steady.

On this route, there is no shortage of glycol enquiries.

From the USG to Rotterdam, there are bits of part cargo space still available for April.

Most of the outsiders’ vessels that were on berth have already sailed, and only the regulars remain at this time as they push tonnage availability.

Freight rates are now expected to remain steady for the time being.

PANAMA CANAL
Wait times for non-booked vessels ready for transit edged higher for northbound vessels and were unchanged for southbound vessels this week, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image.

Wait times last week were 0.9 days for northbound traffic.

The Panama Canal Authority (PCA) said current forecasts indicate that steady rainfall will arrive later this month and continue during the rainy season, which would allow the PCA to gradually ease transit restrictions and traffic could return to normal by 2025.

Global container shipping major Maersk said it will resume Panama Canal transits for its OC1 service beginning 10 May, ending its “two-loop” setup it established in January because of transit restrictions brought on by a persistent drought.

Please see the Logistics: Impact on chemicals and energy topic page

Additional reporting by Bruno Menini and Kevin Callahan