SHIPPING: Global container rates edge higher, volumes shifting to West Coast ahead of tariffs

HOUSTON (ICIS)–Global shipping container rates edged slightly higher this week as they continue to moderate after more than doubling from early-May, and rates from Shanghai to the US West Coast fell, according to supply chain advisors Drewry.

Drewry’s composite World Container Index (WCI) rose by just 1% and is up by just 1.2% over the past two week, as shown in the following chart.

Average rates from China to the US East Coast have continued to rise and are nearing $10,000/FEU (40-foot equivalent unit), as shown in the following chart.

Drewry expects ex-China rates to hold steady next week and remain high throughout the peak season.

Rates from online freight shipping marketplace and platform provider Freightos showed similar rates of increase.

Judah Levine, head of research at Freightos, in noting the slower rate of increase also pointed to signs that prices may have already peaked.

“Daily rates so far this week are ticking lower and major carriers have not announced surcharge increases for later this month or August,” Levine said.

Levine said peak season likely started early this year as retailers ordered early to beat possible labor issues at US Gulf and East Coast ports and as consumers continued to spend on goods.

Emily Stausboll, senior shipping analyst at ocean and freight rate analytics firm Xeneta, said she is seeing some carriers already lowering spot rates.

“This suggests a growing level of available capacity in the market and shippers can once again start to play carriers off against each other – instead of feeling they need to pay whatever price they are offered to secure space. As the balance of negotiating power starts to swing back towards shippers, we should see spot rates start to come back down,” Stausboll 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.

VOLUMES SHIFT TO WEST COAST
The Port of Los Angeles saw a 10% increase from the previous month and a slight increase year on year in volumes, Gene Seroka, executive director of the Port of Los Angeles said.

Some retailers are rushing to import volumes ahead of the US presidential election in November as Republican nominee Donald Trump has proposed hiking tariffs, especially on goods from China.

But a persistently strong economy is also supporting the rise in imports.

“The US economy continues to be the primary driver of our cargo volume and I expect to see that continue in the months ahead,” Seroka said.

Many importers shifted their deliveries to the US East Coast in 2022 when congestion at West Coast ports surged amid strong consumer demand coming out of the pandemic.

The shift in volumes from the East Coast has not led to any congestions at the West Coast ports of Los Angeles and Long Beach, according to the Marine Exchange of Southern California (MESC).

“Vessels and cargo arriving, departing, and shifting around the ports of LA and LB and continue to move normally with no labor delays and ample labor,” MESC executive director Kip Louttit said.

Louttit also said the forecast for arriving container ships over the next two weeks is trending higher.

LIQUID CHEM TANKER RATES
Rates for liquid chemical tankers ex-US Gulf were stable to softer this week, with decreases seen on the USG-Asia and USG-Brazil trade lanes.

From the USG to Asia, there has still been interest in large cargoes, but volumes overall have been slowing down.

The absence of market participants has caused freight rates to stumble some, with more downward pressure on smaller parcels due to the small pockets of space readily available.

From the USG to Brazil, the list of ships open in the USG continues to grow, with space still available which could lead to continued downward pressure and even lower rates.

Activity typically picks up during summer months, but this is not currently being seen.

PANAMA CANAL
The Panama Canal will limit transits from 3-4 August because of planned maintenance.

The east lane of the Miraflores locks will be out of service for concrete maintenance on the east approach wall, the Panama Canal Authority (PCA) said.

The PCA began limiting transits in July 2023 because of low water levels in Gatun Lake caused by an extended drought.

Restrictions have gradually eased over the past few months and are approaching the average daily transits of 36-38/day seen prior to impacts from the drought.

The improved conditions at the canal are likely to improve transit times for vessels traveling between the US Gulf and Asia, as well as between Europe and west coast Latin America countries.

This should benefit chemical markets that move product between regions.

Wait times for non-booked southbound vessels ready for transit have been relatively steady at less than two days, according to the PCA vessel tracker.

Wait times were less than a day for northbound vessels and less than two days for southbound traffic.

Focus article by Adam Yanelli

With additional reporting by Kevin Callahan

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