SHIPPING: Asia-US container rates edge higher on tariffs, tighter capacity

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US reversed direction and edged slightly higher this week as US tariffs went into effect and as capacity tightened.

The increases are in line with global average rates, which ticked higher by 3% this week, according to supply chain advisors Drewry and as shown in the following chart.

Rates from Shanghai to Los Angeles rose by 3% and rates from Shanghai to New York rose by 2%, as shown in the following chart.

Drewry expects rates to increase in the coming weeks due to tariffs and reduced capacity.

Rates from online freight shipping marketplace and platform provider Freightos also rose over the week, with Asia-USWC rates up by 3% and Asia-USEC rates up by 5%.

Judah Levine, head of research at Freightos, said many shippers rushed to get cargo loaded in the small window before tariffs went into effect, but noted that there are concerns that the sudden policy changes could also mean delays at US customs for arriving shipments.

Levine said he expects to see a drop in demand for containers into the US as shippers wait for the situation to stabilize.

Peter Sand, chief analyst at ocean and freight rate analytics firm Xeneta, said global maritime supply chains have become more complex amid the trade war between the US and China.

“Shippers will be monitoring freight costs across the major and secondary trades,” Sand said. “Japan, for example, is one the key trade partners with the US, so a rush to frontload goods could put upward pressure on spot rates on this trade.”

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. Titanium dioxide (TiO2) is also shipped in containers.

They also transport liquid chemicals in isotanks.

LIQUID TANKER RATES HOLD STEADY
US liquid chemical tanker freight rates as assessed by ICIS held steady this week despite downward pressure for several trade lanes.

There is downward pressure on rates along the USG-Asia trade lane as charterers are seeking to divert cargoes to other regions. Overall, most market participants continue to struggle with tariff uncertainties and other alternatives. As a result of the limited cargo activity, spot rates appear to be softening.

However, methanol requirements from the region remain active to Asia.

Similarly, rates from the USG to Rotterdam were steady this week, even as space among the regular carriers remains limited.

However, several larger size cargos of caustic soda, methanol, MTBE, ethanol and styrene were seen in the market.

Several outsiders have come on berth for both April and May, adding to the available tonnage for completion cargos. Easing demand for clean tankers has attracted those vessels to enter the chemical sector.

Contract tonnage continues to prevail, with interest in styrene, methyl tertiary butyl ether (MTBE), methanol and ethanol.

For the USG to South America trade lane, rates remain steady with a few inquiries for methanol and ethanol widely viewed in the market. Overall, the market was relatively quiet with fewer COA nominations, putting downward pressure on rates as more space has become available.

On the bunker side, fuel prices have declined as well, on the back of plummeting energy prices, as a result week over week were softer.

Additional reporting by Kevin Callahan

Thumbnail image shows a stack of shipping containers. Image by Shutterstock