LOGISTICS: Container rates rise for first time since January; Canadian rail workers vote to strike

HOUSTON (ICIS)–Global average rates for shipping containers rose for the first time since January, workers at freight rail carriers Canadian National (CN) and Canadian Pacific Kansas City (CPKC) have voted in favor of a strike, and the US regulator that oversees railroads finalized a rule allowing reciprocal switching, highlighting this week’s logistics roundup.

CONTAINER RATES
Shipping container rates have been rising steadily since December when attacks by Houthi rebels on commercial vessels in the Red Sea forced carriers to take the longer route around the tip of the African continent before leveling off last week.

This week, the global average for 40-foot shipping containers rose by 1%, according to supply chain advisors Drewry and as shown in the following chart.

Rates from Shanghai to the US East Coast edged slightly higher, but rates from China to the West Coast edged slightly lower, as shown in the following chart.

Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said that the overall container market has settled into a new routine that avoids the Red Sea.

“Though significant backlogs, congestion and equipment shortages seen during the first few weeks of the crisis have dissipated, adjustments have resulted in some moderate but ongoing disruptions,” Levine said in a weekly update.

He said that even after falling drastically since the beginning of the year, prices remain well above normal and are likely to increase relative to this new floor as demand is set to increase for peak season.

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 CHEMICAL TANKERS
US liquid chemical tanker freight rates assessed by ICIS were unchanged this week.

From the US Gulf (USG) to Asia, the market has been quieter this week as a holiday-shortened week has sidelined some key players.

There have been only a few parcels quoted, which is placing downward pressure on freight rates for smaller lots.

Larger base cargoes of monoethylene glycol (MEG), methyl tertiary butyl ether (MTBE), and methanol have been popular chemicals on this route, keeping larger freight rates steady.

From the USG to India, the market has been very quiet.

PORT OF BALTIMORE
Since the opening of a fourth channel into the Port of Baltimore, 171 commercial vessels have transited the waterway, including five of the vessels that were trapped inside the port after the containership Dali struck the Key Bridge, causing it to collapse, according to the Unified Command (UC).

The MSC Passion III entered the port on 29 April, according to vesselfinder.com, making it the first container ship to enter the port since the accident.

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.

But a market participant in Ohio told ICIS previously that it is seeing delays in delivery times for imports as vessels originally destined to offload in Baltimore are getting re-routed to other ports.

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

Wait times a week ago were 2.5 days for northbound traffic and 5.6 for southbound traffic.

The PCA will increase the number of slots available for Panamax vessels to transit the waterway beginning 16 May and will add another slot for Neopanamax vessels on 1 June based on the present and projected water levels in Gatun Lake.

RAILROADS
Workers at freight rail carriers Canadian National (CN) and Canadian Pacific Kansas City (CPKC) have voted in favor of a strike.

A first work stoppage could occur as early as 22 May, if no new collective agreements are reached by then, officials at labor union Teamsters Canada Rail Conference (TCRC) said in a televised announcement on 1 May.

The rail carriers warned that a work stoppage would disrupt supply chains throughout North America and constrain trade between Canada and the US and Mexico.

The two railroads account for the bulk of freight rail traffic in Canada.

Meanwhile, chemical industry participants were largely supportive of a final rule adopted by the Surface Transportation Board (STB) on reciprocal switching for inadequate service by railroads, but think the scope was too narrow and it does not cover a significant portion of rail traffic.

For the first time, the STB said it is requiring that three service metrics be maintained on a standardized basis across all Class 1 railroads.

In the US, chemical railcar loadings represent about 20% of chemical transportation by tonnage, with trucks, barges and pipelines carrying the rest. In Canada, chemical producers rely on rail to ship more than 70% of their products, with some exclusively using rail.

Rail is also the predominant shipping method for US ethanol.

Additional reporting by Kevin Callahan and Stefan Baumgarten

Please see the Logistics: Impact on chemicals and energy topic page