SHIPPING: Asia-USWC container rates edge higher on late-season holiday demand

HOUSTON (ICIS)–Shipping container rates from east Asia and China to the US West Coast rose this week, reversing a trend that saw rates fall by almost 36% from July, as late-season holiday demand emerged.

Many importers had pulled holiday volumes early to avoid any problems related to a US East Coast dock workers strike that was set to begin on 1 October.

Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said front-loading of volumes to the East Coast in September may have been stronger than to the West Coast due to the rush to beat the 1 October strike deadline.

Supply chain advisors Drewry has Shanghai-USWC rates edging higher by less than 1% and said of the increase in spot rates ex-China that it expects this trend to continue as the Christmas rush intensifies.

Drewry’s World Container Index showed average global rates rising, as shown in the following chart.

Rates from Shanghai to Europe rose more dramatically than those from Shanghai to the US, as shown in the following chart from Drewry.

Levine said the stronger front loading of volumes to the East Coast could explain the sharper drop of East Coast rates over the last few weeks, as well as the anomaly that saw East Coast rates fall below West Coast rates.

Rates to the East Coast are typically about $1,000/FEU (40-foot equivalent units) higher than to the West Coast.

Drewry still has East Coast rates about $400/FEU higher than West Coast rates.

Levine noted that rates to both coasts are still $1,000-1,500/FEU above their April lows.

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.

EAST COAST LABOR UPDATE
Union dock workers and US East Coast port operators will resume negotiations on a new master agreement in November, according to a joint statement from both parties.

The International Longshoremen’s Association (ILA), representing the dock workers, and the United States Maritime Alliance (USMX), which represents the ports, reached a tentative agreement on 3 October that ended a three-day strike.

The strike was paused until 15 January after parties agreed on the salary portion of the agreement, essentially meeting in the middle.

Levine said port automation remains the major sticking point, and if there is no progress in the coming weeks anxious shippers may start increasing orders again ahead of another possible strike.

CANADA WEST COAST PORT LABOR UNREST
The British Columbia Maritime Employers Association (BCMEA), which represents ports on Canada’s west coast, has issued formal notice of its intention to lock out port workers coastwide, starting Monday, 4 November at 8:00 local time, it said on Friday.

On Canada’s east coast, dock workers at the Port of Montreal on Thursday, 31 October, went on an indefinite strike at two of the port’s four container terminals.

The labor dispute is about automation at Dubai Ports World (Canada), as well as retirement benefits. The parties have been negotiating a new collective labor deal since the last one expired in March 2023.

LIQUID CHEM TANKER RATES STABLE
US chemical tanker freight rates were largely unchanged this week for most trade lanes, while vessel demand continues to be soft for various routes.

The USG to ARA remains soft and solid for contractual cargoes and any additional available CPP tonnage could continue to pressure the market even further.

Similarly, that situation exists for volumes on the USG to the Caribbean and South America trade lanes.

From the USG to these regions, space among regular carriers remains available, due to a lack of interest.

However, for the USG to Asia spot volumes continues to be weak as there seems to be plenty of prompt space available.  Mainly parcels of methanol to China seems to have provided any support to the weak market.

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

With additional reporting by Stefan Baumgarten and Kevin Callahan

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