Container rates from Asia to US Pacific Coast tick lower, edge higher to Atlantic Coast

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China were relatively stable this week, with prices to the Pacific Coast falling by 1% while rates to the Atlantic Coast rose by 2% amid reduced industrial activity in China due to coronavirus restrictions and ramifications of Russia’s invasion of Ukraine.

China’s National Bureau of Statistics (NBS) said on 31 March that the official manufacturing PMI fell to 49.5. Anything below 50 signifies a retraction.

The war in Ukraine and related economic impacts led to a decline in export orders in March as customers suspended or cancelled shipments, said the NBS release.

Coronavirus outbreaks in Shanghai have led to a two-phase lockdown and mass testing that began on Monday.

The first phase, from 05:00 local time 28 March to 05:00 1 April, will be implemented in the east, south, and neighbouring regions of the Huangpu river.

The second phase, from 03:00 1 April to 03:00 5 April, will cover regions to the west of the Huangpu river.

Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said the strategy is designed to keep ports open to minimise disruptions to manufacturing and trade, like they did in Shenzhen.

“The recent example at Shenzhen suggests that, with ports open, the impacts will likely not be as severe as the shutdown of Yantian a year ago, which created a significant backlog and sent ocean rates spiking,” Levine said.

Levine still expects there to be some drop in the availability of goods and port output, which could weigh on rates.

“Destination ports in the US and Europe could expect some lull in volumes in the coming weeks, followed by an increase that would be another challenge to already congested ports,” Levine said.

Congestion at the US Pacific Coast ports of Los Angeles and Long Beach has stabilised at around 40 container ships, according to the Marine Exchange of Southern California (MESC).

As of Wednesday evening, there were 43 container ships in the queue, MESC said.

That is up from the record low of 39 container ships seen in the previous week, but well below the high of more than 100 ships seen at the peak.

Container ships are relevant to the chemicals 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.

Additional reporting by Yun Xie, Fanny Zhang

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