SHIPPING: Asia-US container rates fall, but average global rates rise as possible port strike nears

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US were flat to softer this week while global average rates rose by 6%, but the looming strike at US Gulf and East Coast ports could put upward pressure on rates in the coming week.

Rates from supply chain advisors Drewry showed Shanghai-New York rates fell slightly to $5,160 from $5,182, while rates from Shanghai to Los Angeles plunged by more than 12%, as shown in the following chart.

The previous chart also shows the sharp increases in rates from Shanghai to Rotterdam and Genoa, which contributed to the global average increase as shown in the following chart.

Drewry expects an increase in rates on the Transpacific trade in the coming week due to the looming ILA (International Longshoremen’s Association) port strike in January 2025 and the anticipated rush to ship goods before the strike begins.

The 15 January deadline for finalizing a new labor agreement between unionized dock workers at US Gulf and East Coast ports and the negotiating entity for the ports is nearing with no clear progress on a key remaining issue – automation.

Rates at online freight shipping marketplace and platform provider Freightos showed a sharp increase on the Asia-NY trade lane and a 4% decrease from Asia-LA.

Rates at Freightos are higher than rates at Drewry.

Judah Levine, head of research at Freightos, said the increases on Asia-NY are because of importers again frontloading shipments ahead of a possible strike and to beat tariffs proposed by the incoming Trump administration.

Some carriers have already begun introducing general rate increases (GRIs) to try and push rates higher.

Levine said the window to move shipments from the East Coast to the West Coast ahead of a possible strike is closing, but many retailers are sitting on significant inventories from pulling forward shipments ahead of the original 1 October strike deadline.

“These factors may make early December rate increases difficult to sustain, though prices could increase later in the month or early in January ahead of Lunar New Year,” 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), are shipped in pellets.

They also transport liquid chemicals in isotanks.

LIQUID TANKER RATES
Overall, the US chemical tanker freight rates were unchanged this week for several trade lanes, except for the USG-Asia trade lane as spot tonnage remains tight.

This all-basis limited spot activity to most regions and as COA nominations are taking longer than usual for the regular vessel owners.

They have tried to delay the sailings but there has been very little spot space in the market leaving no other options for full cargoes and in turn impacting spot rates.

MEG, ethanol and styrene still are being seen quoted in the market from various traders, for early January loadings to Asia.

Eastbound space had not yet been fully absorbed despite the few fresh inquiries for small specialty parcels stemming from USG bound for Antwerp, most owners waiting for full contract nominations.

Various glycol, ethanol, methyl tertiary butyl ether (MTBE) and methanol parcels were seen quoted to ARA and the Mediterranean as methanol prices in the region remain higher.

Additionally, ethanol, glycols and caustic soda were seen in the market to various regions.

PANAMA CANAL
Fiscal Year 2024 revenue rose from 2023, the Panama Canal Authority said this week even after having to reduce crossings for part of the year because of a severe drought.

The Authority said a noticeable impact from the drought was a decrease in deep draft transits, which fell by 21%.

Despite the arrival of the rainy season, the challenge of water for Panama and the Panama Canal remains and serves as a reminder that climate change and its effects are a reality requiring immediate attention and concrete action.

Potential solutions include the identification of alternative sources of water from the 51 watersheds and lakes in Panama, along with projects that can increase storage capacity to ensure water availability for the entire Panamanian population and the Canal’s operation, thereby ensuring its long-term sustainability.

At the same time, the Panama Canal is exploring additional short- and long-term solutions that can optimize the use and storage of water at the Canal for the benefit of both the local population and its operations.

Additional reporting by Kevin Callahan

Thumbnail image shows a container ship. Photo by Shutterstock