LOGISTICS: Container rates surge, tanker rates flat to lower, Panama Canal raises maximum draft

HOUSTON (ICIS)–Global rates for shipping containers continue to surge, liquid chemical tanker rates were flat to lower, and the Panama Canal Authority (PCA) is increasing the maximum allowable draft to transit the Neopanamax locks, all highlighting this week’s logistics roundup.

CONTAINER RATES
Global rates for shipping containers continue to surge, although the rate may be slowing.

Global average rates from supply chain advisors Drewry rose by 4% this week, a slower pace from the double-digit increases over the previous two weeks.

The following chart shows that average rates are approaching $4,250/FEU (40-foot equivalent unit).

Rates from Asia to the US are also at new highs for the year, as shown in the following chart.

Rates continue to be pressured higher because of unrest in the Middle East, specifically attacks on commercial vessels by Yemen-backed Houthi rebels.

Houthis even claimed responsibility for an attack on the USS Dwight D Eisenhower, an aircraft carrier stationed in the Red Sea.

US and UK responded by sending fighter jets to strike Houthi targets in Yemen.

Rates are likely to continue rising, according to ocean and freight rate analytics firm Xeneta.

“The ocean freight container shipping market has seen rapid and dramatic increases during May and that is set to continue with further growth in spot rates,” Peter Sand, Xeneta chief analyst, said. “On 1 June, spot rates will reach a level we have not seen since 2022 when the COVID-19 pandemic was still wreaking chaos across ocean freight supply chains.”

From the Asia-Pacific to US West Coast, market average spot rates are expected to reach $5,170/FEU on 1 June, which would surpass the Red Sea crisis peak of $4,820/FEU seen on 1 February, Xeneta said.

This is an increase of 57% during May and the highest spot rates have been on this trade for 640 days.

From the Asia-Pacific to US East Coast, spot rates are expected to reach $6,250/FEU on 1 June, only slightly shy of the Red Sea crisis peak of $6,260/FEU and an increase of 50% since 29 April.

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
US chemical tanker freight rates assessed by ICIS were mostly unchanged. However, rates increased from Brazil to the US Gulf (USG) and fell slightly from the USG to Asia and from the USG to Brazil.

From the USG to Brazil, there continues to be plenty of contractual volumes for both caustic soda and monoethylene glycol (MEG).

All the regulars are open and have a lot of tanks to fill.

This route has experienced significant downward pressure due to market dynamics and because activity here has been limited.

The USG to Brazil trade lane is expected to remain at a standstill which could add further pressure.

From the USG to Asia, freight rates declined due to lack of interest.

PORT OF BALTIMORE
The Unified Command (UC) continues to clear wreckage from the bottom of the Patapsco river, projecting to fully restore the Fort McHenry Federal Channel to its original 700-foot width and 50-foot depth by 8-10 June.

The UC cleared a 400-foot-wide swath of the federal channel on 20 May, permitting all pre-collapse, deep-draft commercial vessels to transit the port.

Source: Maryland State Police Aviation Command

PANAMA CANAL
The Panama Canal Authority (PCA) is increasing the maximum allowable draft to transit the Neopanamax locks, effective immediately.

The PCA said the arrival of the rainy season in the Canal watershed prompted the action.

Wait times for non-booked southbound vessels ready for transit held steady this week for northbound traffic and fell for southbound vessels, according to the PCA vessel tracker and as shown in the following image.

Wait times a week ago were 1.5 days for northbound vessels and 3.6 days for southbound vessels.

Additional reporting by Kevin Callahan