LOGISTICS: Container rates surge, chem tanker rates ease; Canada rail strike unlikely before July

HOUSTON (ICIS)–Rates for shipping containers continued to surge, liquid chemical tanker rates were flat to softer, and a possible freight rail strike in Canada is unlikely before mid-July, highlighting this week’s logistics roundup.

CONTAINER RATES
The global average for shipping containers has surged past the level seen in late January because of unseasonal increases in demand for ocean freight ex-Asia, as shown in the following chart.

Rates are being pressured higher because of possible start of a restocking cycle in Europe and as US importers pull forward some peak-season demand on concerns of pending labor issues or additional Red Sea disruptions later in the year, according to Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos.

Rates for containers ex-Asia to both US coasts and to Europe are also nearing multimonth highs, as shown in the following chart.

Drewry expects the spike in spot freight rates to lessen in the next few months.

But Levine pointed to general rate increase (GRI) announcements for June, which he said indicate that carriers are not expecting demand to ease or conditions to improve in the short term.

CMA CGM is setting Asia – north Europe rates at $6,000/FEU (40-foot equivalent unit) starting 1 June, and Hapag-Lloyd has announced an Asia – North America Peak Season Surcharge of $600/FEU to start June that will climb to $2,000/FEU mid-month.

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 CHEM TANKER RATES
Rates for liquid chemical tankers ex-US Gulf were flat to lower this week.

US chemical tanker freight rates assessed by ICIS were mostly steady to lower as rates fell from the US Gulf (USG) to both Asia and India while also edging lower from the USG to Rotterdam. However, were unchanged from the USG to Caribbean and South America. Overall, the market was subdued entering the long holiday weekend.

From the USG to Asia, this market has remained overall soft despite a few larger monoethylene glycol (MEG) parcels being seen in the market.

From the USG to Rotterdam, it has remained quiet again this week, with available space for part cargo still open amid a lack of inquiries or interest from charterers.

CANADA FREIGHT RAIL LABOR ISSUES
A possible freight rail strike in Canada is not likely to begin before mid-July, according to rail carrier Canadian Pacific Kansas City (CPKC).

The ongoing uncertainties over the looming strike make it hard for Canadian chemical, fertilizer and other industrial producers, in particular exporters, to prepare for a work stoppage.

After about 9,300 unionized conductors, train operators and engineers at freight rail carriers CPKC and Canadian National (CN) earlier this month voted for a strike as early as 22 May.

Canada’s federal labor minister referred the matter to the Canada Industrial Relations Board (CIRB), a quasi-judicial tribunal charged with keeping industrial peace in Canada.

PORT OF BALTIMORE
The full reopening of the Port of Baltimore is closer after the Key Bridge Response Unified Command (UC) refloated the container ship Dali on Monday morning and moved it away from the scene of the collision.

The Dali struck the Francis Scott Key bridge on 26 March, causing its collapse, and essentially closing the port.

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).

PANAMA CANAL
Wait times for non-booked southbound vessels ready for transit fell this week for traffic in both directions, according to the Panama Canal Authority (PCA) vessel tracker and as shown in the following image.

Wait times a week ago were 3.6 days for northbound vessels and 13.9 days for southbound vessels.

With additional reporting by Kevin Callahan and Stefan Baumgarten