Spot rates for shipping containers from east Asia and China fell to the West Coast and rates to the East Coast were mixed, while spot liquid tanker rates fell again this week.
CONTAINER RATES
Rates to the West Coast were lower this week and are now between $5,800-$7,100/FEU (40-foot equivalent unit), while rates to the East Coast were mixed and are now between $7,600-$9,150/FEU.
Rates from ocean and freight rates and analytics firm Xeneta ticked lower to the West Coast and were flat to the East Coast, as shown in the following chart.
Emily Stausboll, senior shipping analyst at Xeneta, said there are likely to be further declines at the start of August, but the gradual softening shows how rates fall far slower than they increase during a market spike.
“Some blank sailings are beginning to appear on trades from Asia to North America, but even if rates are starting to soften, they are still at a very healthy level for carriers who will want to make sure they have capacity available to take advantage for as long as possible,” Stausboll said.
Stausboll said that no individual carrier wants to be the first to pull significant capacity when competitors can step in and take their volumes, which limits the scope for capacity management to reverse the spot rate decline.
“Carriers will use the renewed conflict between Iran and the United States – and the associated rise in bunker costs – as justification to slow the decline in rates through surcharges,” Stausboll said. “But operationally, nothing has changed for container shipping this week because the vast majority of vessels were not transiting the Strait of Hormuz or the Red Sea before the latest escalation and they are not doing so now.”
Rates from supply chain advisors Drewry fell this week to both coasts because of increased capacity and easing demand.
Drewry said there were six blank sailings scheduled on the transpacific trade route next week, compared with nine scheduled this week, indicating higher capacity deployment by carriers and a widening supply/demand gap.
Drewry expects rates to remain stable next week.
Rates from online shipping marketplace and platform provider Freightos were flat to the East Coast and fell by 6% to the West Coast.
Judah Levine, head of research at Freightos, said that even as crude prices are rising because of the escalation of tensions in the Middle East, there is a slight easing overall for container rates as carriers add capacity to some lanes and unwind from an early peak season.
“Carriers had announced significant GRIs [general rate increases] and PSSs [peak season surcharges] for 15 July, but instead spot rates declined slightly across the major east-west lanes, with Asia-N America East Coast prices staying level.
“Daily rates so far this week show West Coast and Asia-Mediterranean prices continuing to slide,” Levine said. “That carriers decided against the mid-month hikes suggest that recent projections of cooling demand after a red hot, frontloaded, June and early-July may be playing out now.”
Levine said congestion in Asian ports could mitigate the downward pressure on rates.
“At the same time, serious port congestion is absorbing capacity in the Far East, which may mitigate the degree of downward pressure there otherwise would be on spot rates via the current demand dip and capacity additions,” Levine said. “Delays at major origin ports, initially caused by surging volumes, have increased from bouts of bad weather, including from last week’s Typhoon Bavi.”
Rates on the NYFI fell by 1% to the West Coast and rose by 7.0% to the East Coast while rates on the Shanghai Containerized Freight Index (SCFI), which tracks rates for containers leaving Shanghai, fell by 0.56% – down for the third week after rising for each of the previous 10 weeks.
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. Titanium dioxide (TiO2) is also shipped in containers.
They also transport liquid chemicals in isotanks.
TANKER RATES
US chemical tanker freight rates assessed by ICIS were softer overall this week with rates dipping lower for parcels from the US Gulf (USG) to the main trade routes.
Rates from the USG to Rotterdam fell slightly this week, particularly for the clean petroleum products (CPP) market where the decrease was significant. This sent more tonnage into the chemical space and in turn pushed rates lower.
Overall, the spot market is notably quiet, although this trade lane seems to be the busiest compared to other trade lanes. Several large cargoes of biofuels were seen in the market and continue to dominate. Also seen were caustic soda, glycols and styrene for the end of July and early August loadings.
Similarly, there is continued downward pressure along the USG to Asia trade lane as the spot market has been relatively quiet over the last several weeks. Overall, contract of affreightment (COA) volumes are heard to be lower than anticipated.
As a result, this has put rates under continued downward pressure, softening even further. The regular carriers had to drop rates considerably under significant competitive pressure as several larger cargoes of ethylene dichloride (EDC) and monoethylene glycol (MEG) were fixed. Additionally, plenty of space remains available for July and several outsiders are showing space to return to the region for August, which could push the rates even lower.
The same story was seen along the USG to South America route with not many cargoes being quoted in the market and plenty of space remaining for July and August. Most participants believe that owners with any available space will likely have to lower rates to complete the stowage, pushing rates lower. Renewed proposed US tariffs on Brazil could lend pressure for this route particularly for benzene, ethanol and soybean oil, which could see those cargoes shift to Europe or Asia instead.
On the bunker side, fuel prices have surged on the back of soaring energy prices following the heightened tensions in the Middle East, and as a result were significantly higher week on week.
Source: By Adam Yanelli, ICIS,
