Asia-US Pacific Coast container rates continue to plummet

HOUSTON (ICIS)–Transpacific rates for shipping containers continue to plummet – dropping below $4,000/FEU (40-foot equivalent unit) – as consumer demand for goods begins to wane.

Amid persistent inflation and moves by the US Federal Reserve to stem rising costs through interest rate hikes, the National Retail Federation (NRF) expects containerized imports at the nation’s major container ports to come in below last year’s levels for the rest of 2022.

“Consumers are still buying, but the cargo surge we saw during the past two years appears to be slowing down,” Jonathan Gold, NRF vice president for supply chain and customs policy, said.

Rates from east Asia and China to the US West Coast are 80% lower than at the same time last year, according to online freight shipping marketplace and platform provider Freightos.

Judah Levine, head of research at Freightos, said carriers are again cancelling some transpacific sailings to reduce capacity along the trade lane and offer support for values.

The rapid decrease has pushed spot rates below contract rates, Levine said, which is leading importers to try and renegotiate ocean contracts with carriers.

The latest data from the NRF shows import volumes have declined monthly since May.

But even with the slowing demand, projected volumes for Q4 are still expected to be higher than the same months in 2019, and total import volumes for 2022 are likely to outpace 2021 by 1.2% and set a new annual record.

Rates from Asia and China to the US East Coast have also softened, but not as dramatically because shippers shifted more volumes from the west coast ports to US Gulf and east coast ports.

This has also contributed to reduced congestion on the west coast but increased the backups in the US Gulf and at east coast ports.

The backlog of ships waiting to unload at LA/LB was at 12 on Wednesday, which is four above the record low, according to the Marine Exchange of Southern California (MESC).

But German container shipping major Hapag-Lloyd said in an operational update to customers that backlogs and wait times at the ports of Savannah, Georgia, New York and New Jersey, and Port Houston are increasing.

Container ships 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.

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