SHIPPING: Container rates between Asia and the US continue to fall; This trend is expected to continue after the ILA strike

HOUSTON (ICIS) – Tariffs for shipping containers from East Asia and China to the US fell further after a lengthy strike at ports in the Gulf and US East Coast was averted and volumes were largely brought forward in the peak season.

The International Longshoremen’s Association (ILA) strike lasted just three days, and market analysts expect the backlog created by the work stoppage at the Port of New York/New Jersey to clear in two to three weeks or even less.

Some ports extended gate opening hours to allow more time for container delivery or collection.

Nathan Strang, director of Southwest U.S. ocean freight for Flexport, said the company is experiencing relatively smooth terminal and rail operations.

Strang said all Federal Maritime Commission (FMC) detention and demurrage rules remain in effect, but noted that the arrest and demurrage time frames restarted on October 7 after the strike ended.

CONTAINER PRICES FALL
Global average shipping container prices have continued to fall, according to several analysts.

Supply chain consultant Drewry has put its World Container Index (WCI) at $3,349/FEU (40-foot equivalent unit), down 4%, shown in the chart below.

Drewry said container rates from Shanghai to Los Angeles fell 5% and rates from Shanghai to New York fell 3%, as shown in the chart below.

Following the preliminary agreement between the ILA and the ports, Drewry expects rates outside of China to continue to decline slightly in the coming weeks.

Online freight shipping marketplace and platform provider Freightos said rates fell more, but rates were higher.

Judah Levine, head of research at Freightos, said airlines also plan to reduce deployed capacity on the transatlantic trade route later in the month in hopes of preventing tariffs from rising to the $1,600-$1,800/FEU level fall back, which they had maintained for much of the year.

“With the strike over and peak season demand largely behind us with a significant increase in volumes over the last few months, transpacific container rates are expected to continue to rise due to the seasonal lull in volumes between peak season and the Lunar New Year sink,” Levine said.

Container ships and the costs of transporting containers are relevant to the chemical industry because while most chemicals are liquid and transported in tankers, polymers such as polyethylene (PE) and polypropylene (PP) are transported in pellets on container ships.

They also transport liquid chemicals in isotanks.

PRICES FOR LIQUID TANKERS UNCHANGED
Freight rates for U.S. chemical tankers remained stable again this week on most trade routes, even as shipping demand increases on some routes.

Most of the prices of the major chemical centers remain sideways as a large part of the market took part in the European Petrochemical Association (EPCA) conference in Berlin.

There was also calm on the USG route to Asia after the holidays.

Although it is likely that exports outside the US to Europe and Asia will increase, particularly as clean petroleum products (CPP) tonnage continues to focus on alternative cargoes in the petrochemical sector, increasing the already well-supplied spot availability.

On the transatlantic front, the eastern leg is expected to warm up as several US Gulf ports deliver styrene for ARA, among other things.

With additional reporting from Kevin Callahan

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