LOGISTICS: Container rates continue to surge, liquid chem tanker rates mostly lower

HOUSTON (ICIS)–Average global rates for shipping containers continue to surge, liquid chemical tanker rates ex-US Gulf were mostly softer, and work continues to reopen the Port of Baltimore, highlighting this week’s logistics roundup.

CONTAINER RATES
Rates for shipping containers surged by double digits again this week on unexpected demand and tight capacity stemming from Red Sea diversions.

Average global rates surged by 11% over the week, according to supply chain advisors Drewry and as shown in the following chart.

Meanwhile, rates from Shanghai to the US West Coast are up by almost 33% from early-February and rates from Shanghai to the East Coast are more than 30% higher over that period, as shown in the following chart.

Drewry expects ex-China freight rates to rise due to increased demand, tight capacity, and the need to reposition empty containers.

Emily Stausbøll, senior shipping analyst at ocean and freight rate analytics firm Xeneta, said the speed of the increases is causing nervousness in the market.

“Demand reached record levels in Q1 2024, up by 9.2% compared to Q1 2023, and comes at a time when the Red Sea situation is putting increased pressure on shipping capacity,” she said. “But significantly, this is all taking place while the chaos of port congestion and lack of available capacity during the COVID-19 pandemic is still fresh in the memory of shippers.”

“Lessons will have been learned from the pandemic. If shippers fear there is going to be a squeeze on capacity during the peak season in Q3 then they are going to start importing more goods now,” Stausbøll said. “If these increased volumes need to be moved on the spot market, then it is going to put upwards pressure on rates.”

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 lower as rates fell from the US Gulf (USG) to Asia and from the USG to India.

However, rates ticked slightly higher for smaller parcels from the USG to Caribbean and surged from the USG to Brazil.

From the USG to Rotterdam, it has remained quiet again this week, with available space for part cargo still open.

COA volumes have been heavy for owners; however, spot inquiries have been quiet. Due to the available space and softness, this could place further downward pressure on this trade lane.

From the USG to the Caribbean, the market has remained higher with very little prompt space available.

Owners have pushed to keep freight rates mostly steady; however, there is currently a lack of activity from out of the USG.

From the USG to Asia, this market has remained overall soft after a long holiday week in Japan.

BALTIMORE, HOUSTON BRIDGE COLLISIONS
Traffic in and out of the Houston Ship Channel was not affected after a barge struck a bridge connecting Galveston and Pelican islands on Wednesday morning.

JJ Plunkett of the Houston Pilots said the Intracoastal Waterway (ICW) was closed, which could slow movement of barges moving finished product from plants along the channel.

Ships enter the channel by passing between Galveston Island and the Bolivar Peninsula and then move through Galveston Bay before reaching the main section of the channel where refineries, chemical plants and storage facilities are located.

The barge collided with a bridge that connects Galveston Island to Pelican Island, located well to the west of where commercial vessels enter and exit Galveston Bay.

Meanwhile at the Port of Baltimore, the container ship that essentially closed the port on 26 March after it struck the Francis Scott Key Bridge, causing its collapse, is set to be moved now that the mangled remnants of the span were removed from the ship’s bow with controlled blasts on 13 May.

Officials continued to evaluate the situation on Friday in preparation for refloating the vessel and clearing the federal channel.

Officials have evaluated sonar and lidar imagery but are awaiting results from a dive survey before proceeding with plans to refloat and move the vessel.

The closing of the port did not have a significant impact on the chemicals industry as chemicals make up only about 4% of total tonnage that moves through the port, according to data from the American Chemistry Council (ACC).

The ACC said less than 1% of all chemicals involved in waterborne commerce, both domestic and trade volumes, pass through Baltimore.

PANAMA CANAL
Wait times for non-booked southbound vessels ready for transit surged this week while wait times for northbound vessels edged higher, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image.

Wait times a week ago were 2.6 days for northbound vessels and 2.4 days for southbound vessels.

Additional reporting by Kevin Callahan