LOGISTICS: US Gulf, East Coast ports, dock workers eye new contract; Asia-US container rates continue to fall

HOUSTON (ICIS)–Negotiations are ongoing for a new labor agreement between US Gulf and East Coast ports and the International Longshoremen’s Association (ILA), Asia-US shipping container rates continue to slide, and liquid chem tanker spot rates ex-US Gulf are steady to higher, highlighting his week’s logistics roundup.

GULF COAST, EAST COAST LABOR NEGOTIATIONS
The contract between US Gulf and East Coast ports and the ILA expires at the end of September.

The ILA, representing about 14,500 dockworkers, will be negotiating with the United States Maritime Alliance (USMX), which is representing 36 ports, including three of the busiest ports in the US in Houston, New York and New Jersey, and Savannah, Georgia.

This comes after US West Coast ports and the International Longshore and Warehouse Union (ILWU) negotiated a new deal in 2023, but only after a contentious period that saw some port disruptions.

Eric Byer, president and CEO of the Alliance for Chemical Distribution (ACD) (formerly National Association of Chemical Distributors), said the safe, reliable, and timely shipment of chemicals and chemical products are essential to the health and well-being of the entire nation.

“Shippers and businesses are wary of another labor contract dispute following the narrowly avoided West Coast labor strikes last year,” Byer said. “As another labor contract deadline approaches, ACD is monitoring developments of the ongoing negotiations between the East Coast and Gulf Coast ports and the ILA to remain vigilant of potential delays and diversions of shipments.”

Byer noted that US businesses are already dealing with global shipping challenges in the Red Sea and Panama Canal, and a new labor dispute at US ports would only exacerbate these existing challenges and jeopardize the efficient and economic transport of essential chemicals.

“That is why we urge the ports and the USMX to continue to negotiate in good faith with the ILA and to swiftly come to an agreement ahead of the contract expiration this fall,” Byer said.

CONTAINER RATES
Container rates from Asia to the US continue to fall, along with global rates, according to supply chain advisors Drewry and as shown in the following charts.

Container rates remain well above the levels seen before Houthi rebels began attacks on commercial vessels in the Red Sea, leading almost all vessels to divert away from the Suez Canal.

Rates surged because the longer route around the tip of the African continent tightened capacity.

Shippers brought all floating capacity online, increased sailing speeds and brought into service newbuilds to help alleviate the situation.

Softer overall demand also helped ease stressed supply chains.

Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, said most observers expect rates to remain above typical levels as long as the diversions continue as even though supply chains have adjusted to the longer routes, there are still extra costs for fuel and labor that must be accounted for.

With rates currently at two-and-a-half times what they were in 2019, Levine said there is still room for further declines, but he expects them to settle at a new, elevated floor.

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 TANKER RATES
US chemical tanker freight rates assessed by ICIS were steady to higher this week, as spot rates soared from the US Gulf (USG) to Brazil and edged higher on the USG to Amsterdam-Rotterdam-Antwerp (ARA).

USG to Asia as spot rates remained overall unchanged.

From the USG to Brazil, the spot market has picked up and is much tighter than it was a few weeks ago.

The increased demand for space in March and into April has caused freight rates to significantly jump.

Space is mostly gone until the latter half of April.

From the USG to Asia, last week there was increased activity for smaller parcels that prompted owners to fill the void space from their contract of affreightment (COA) nominations and base cargoes.

As a result, smaller parcel rates experienced downward pressure, but base cargo rates remained unchanged due to limited tonnage availability.

PANAMA CANAL INCREASES DAILY TRANSIT SLOTS
The Panama Canal Authority (PCA) added two additional Panamax slots and will add another slot on 25 March based on present and projected water levels at Gatun Lake.

The PCA had said previously that it would reassess the number of slots after the rainy season in April/May.

The increase will bring the number of daily transits allowed up to 27, which is still significantly lower than the average of 36-38 daily transits that were seen prior to the implementation of restrictions.

But the PCA did not lower the limits to 18 in February as originally planned because of improved rainfall in the region.

Wait times for non-booked vessels ready for transit edged lower this week, according to the PCA’s vessel tracker.

Wait times are 1.2 days for northbound traffic and 1.4 days for southbound traffic.

Additional reporting by Kevin Callahan