LOGISTICS: Rates for shipping containers may be leveling off as increases emerge

HOUSTON (ICIS)–Global shipping container rates are starting to moderate, the Panama Canal expects to increase transits in May, and liquid chemical tanker spot rates are mixed, highlighting this week’s logistics roundup.

CONTAINER RATES
Global shipping container rates are plateauing as shipowners have implemented blank sailings to control capacity and as some carriers have announced general rate increases (GRIs).

Freight forwarder Flexport said in an update on 25 April that GRIs announced for ex-Asia westbound routes are expected to stick amid high utilization from carriers.

Flexport noted three factors that supported the increases – a slight increase in demand because of the May labor holiday in China; reduced capacity from the increase in blank sailings; and increased congestion at ports and equipment challenges from certain carriers.

Participants in the US polyethylene terephthalate (PET) told ICIS they are seeing higher freight costs as shipping in the Red Sea and now the Strait of Hormuz continues to be disrupted.

Rate increases have also been announced for cargo heading to the Middle East region.

Global container shipping major Mediterranean Shipping Company (MSC) announced $200/TEU (20-foot equivalent unit) effective 17 May for all cargo leaving the US and Puerto Rico going to the Middle East.

Global container rates from supply chain advisors Drewry were flat this week, as shown in the following chart.

Rates from North China to the US Gulf also held steady, although at levels higher than were seen in December before the attacks on commercial vessels in the Red Sea, as shown in this chart from ocean and freight rate analytics firm Xeneta.

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), which are shipped in pellets.

They also transport liquid chemicals in isotanks.

LIQUID CHEM TANKERS
US chemical tanker freight rates assessed by ICIS were mixed this week with rates rising for parcels from the US Gulf (USG) to Brazil and India. However, rates from the USG to ARA decreased and all other trade lanes held steady.

From the USG to Brazil, this trade lane has had limited availability for H1 May loading.

However, mid and H2 May have showed a few more options with an outsider on berth currently to South America. This could place downward pressure on this route.

Although COA nominations are still up in the air, a few regular owners hope to have more space and a broker says that time will tell when this space fills up.

From the USG to Asia, regular players have said they are full on most of their positions through this time, which has placed some upward pressure on smaller parcels as it has become harder to find space for them.

Currently, the USG to Asia market appears to be in a fragile balance between the interest in larger slugs, and the growing number of players looking for stainless steel vessels in the USG for May, according to a broker.

BALTIMORE BRIDGE
The Unified Command (UC) announced the opening of a new channel at the Port of Baltimore that has allowed ships trapped inside the port to leave.

The Fort McHenry Limited Access Channel, which runs the length of the northeast side of the federal channel, provides additional access to commercially essential traffic.

The limited access deep draft channel has a controlling depth of a minimum of 35 feet, a 300-foot horizontal clearance, and a vertical clearance of 214 feet.

Starting Monday, April 29, operations to remove the Dali will require suspension of transits through the Fort McHenry Limited Access Channel.

Once deemed safe, the channel will reopen for commercial traffic.

PANAMA CANAL
The Panama Canal Authority (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.

The PCA began limiting the number of transits in August 2023 because of low water levels in Gatun Lake brought on by a severe drought that made 2023 the second driest year on record for the Panama Canal watershed catchment area.

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

Wait times a week ago were 3.0 days for northbound traffic and 2.9 for southbound traffic.

The Panama Canal Authority (PCA) said current forecasts indicate that steady rainfall will arrive later this month and continue during the rainy season, which would allow the PCA to gradually ease transit restrictions and traffic could return to normal by 2025.

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

With additional reporting by Melissa Wheeler and Kevin Callahan