SHIPPING: Asia-US container rates stable as East Coast port labor negotiations break down

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US were largely stable this week but exporters are being urged to book outgoing shipments 4-6 weeks in advance as labor issues between union dock workers and US Gulf and East Coast ports stalled.

For US companies working to export excess volumes to balance year-end inventories, those shipments need to be going out this week.

For importers, rates from Asia to the US West Coast fell by 2% and are down by almost 3% over the past two weeks, according to supply chain advisors Drewry and as shown in the following chart.

The chart also shows rates from Asia to New York were largely stable, down by 0.20% and by 0.36% over the past two weeks.

Global average rates held steady at around $3,440/FEU (40-foot equivalent unit), as shown in the following chart.

With the breakdown in negotiations between the US Maritime Alliance (USMX), representing the ports, and the International Longshoremen’s Association (ILA), representing the dock workers, and with the expectation of significant tariff increases under the administration of President-elect Donald Trump, analysts expect a surge of imports over the last few weeks of the year.

The National Retail Federation (NRF) has revised its forecast for the rest of the year on the developments.

Ports have not yet reported October’s numbers, but the NRF/Hackett Associates Global Port Tracker projected the month at 2.13 million TEU (20-foot equivalent units), up 3.7% year on year. November is forecast at 2.15 million TEU, up 13.6% year on year, and December at 1.99 million TEU, up 6.1%.

That would bring 2024 to 25.3 million TEU, up 13.6% from 2023.

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.

CANADA PORT LABOR ISSUES
The Port of Montreal will resume operations on Saturday, 16 November, at 07:00 local time, following labor disruptions that started on 31 October and a subsequent lockout of about 1,200 dock workers.

The Port of Vancouver and other Canadian west coast ports resumed operations on Thursday after a strike and lockout of about 730 foremen who supervise more than 7,000 dock workers that began on 4 November.

The Port of Vancouver is Canada’s largest port by far.

More than Canadian dollar (C$) 22 million ($15.7 million) of chemistry and plastic products was traded through Vancouver and other west coast ports each day in 2023, for a total of C$8 billion for the year, according to the Chemistry Industry Association of Canada (CIAC).

LIQUID CHEM TANKER RATES STABLE
US chemical tanker spot rates were overall steady this week for most trade lanes, while vessel demand continues to remain soft for various routes.

One exception is rates from the USG to the Mediterranean, which surged as interest to this region remains steady.

There was an uptick on cargoes from various regions to Montreal as shippers work to deliver and pick up material before the ice season closes for winter transit and soon will require ice class vessels.

The US Gulf to ARA remains soft and solid for contractual cargoes and as CPP tonnage continues to participate in the chemical sector. If it persists it could continue to pressure to 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 continue to be weak as there seems to be plenty of prompt space available.

Mainly parcels of monoethylene glycols (MEG), ethanol and methanol to this region seems to have provided any support to the weak market.

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

Bunker prices remain stable mainly due to the continued the volatility in energy prices week on week.

PANAMA CANAL MAINTENANCE
The West Lane of Miraflores Locks will be out of service due to concrete maintenance on the West Southend approach wall for about 48 hours from early on 23 November until late on 24 November, according to the Panama Canal Authority (PCA).

The number of slots available to super and regular vessels will be reduced because of the maintenance.

Once the maintenance is complete, the 20 slots for supers and the six slots for regular vessels will be reinstated for booking dates beginning 25 November, the PCA said.

As of September, the PCA has 36 slots per day after limiting transits late in 2023 because of a severe drought in the region.

With additional reporting by Kevin Callahan and Stefan Baumgarten