Rates for shipping containers from east Asia and China to the US West Coast fell this week and rates to the US East Coast were steady to higher, while rates for liquid chemical tankers ex-US Gulf were steady on most trade lanes with a slight uptick on the USG-Asia route.
CONTAINER RATES
Rates from Asia to the West Coast were mostly lower and are now in the range of $5,700-$6,250/FEU (40-foot equivalent unit).
Rates are more than three times higher than they were prior to the onset of the US-Iran war.
Peter Sand, chief analyst at ocean and freight rates and analytics firm Xeneta, said overall rates have been moving sideways over the past week.
“Carriers are surely ready to deploy more capacity into the main trade lanes, but shippers aren’t asking for it right now – certainly not on any trade besides Asia-Pacific to US East Coast, where our rates seem to be sticky at a quite high level,” Sand said.
Sand said that while some importers may have pulled forward volumes to beat tariffs, not all did so and there may still be some peak-season demand remaining.
“For the market as such, it seems as if we are in a pause before the real peak season starts,” Sand said. “Some shippers may have moved cargo earlier than previously, but it’s not like everybody front-loaded, not in the US nor into Europe.”
Sand anticipates upward pressure on rates to the US in the near term.
“Early indications for the start of August suggest markets into Europe are probably going down, while we anticipate rates into the US – whether coming from Asia or north Europe – to go up,” Sand said. “No large swings altogether.”
Rates from supply chain advisors Drewry edged lower to the West Coast and were essentially flat to the East Coast.
“Following softening demand and the slowdown in front-loading activity, carriers are actively managing capacity through blank sailings,” Drewry said. “Eight blank sailings are scheduled for next week, up from seven this week, resulting in increased available capacity in the market.”
As a result, Drewry expects the volatility in rates to reduce in the coming week.
Rates on the Shanghai Containerized Freight Index (SCFI), which tracks rates for containers leaving Shanghai, rose by 4.67% following three consecutive down weeks.
Rates on the NYFI fell by 1.7% to the West Coast and rose by 5.1% to the East Coast.
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 overall steady to lower this week for parcels from the US Gulf (USG) to the main trade routes.
There continues to be downward pressure along the USG to ARA trade lane as the spot market has been relatively quiet over the last week. Additionally, COA (contract of affreightment) volumes are heard to be lower than anticipated as well. As a result, this has put rates under downward pressure, softening them even further. Given the few inquiries seen in the market and as monoethylene glycol (MEG) seems to be the most prevalent cargo quoted. Overall, market commentary was limited this week, which is likely due to many market participants on summer holiday. As it is the summer holiday season already, the spot trade into northwest Europe is also maintaining relatively softer activity.
Freight rates ticked slightly lower and are expected to face downward pressure in the next few weeks unless there is an influx of additional inquiries seen in the market.
Similarly, rates from the USG to Asia were steady this week. However, overall activity in the Asian trade lane appears to be slowing down, putting the rates under downward pressure. However, the usual cargoes of methanol, styrene and ethanol were reportedly fixed for end of early August departures.
Freight rates are now expected to remain steady for the time being along this route although CPP (clean petroleum products) experienced unusually lower freight rates which may make it attractive to enter the chemical space, adding to the existing availability of tonnage.
From the USG to Brazil, this trade lane had seen more inquiries, but there is plenty of available space for August lending downward pressure to spot rates, leaving most owners to still try and fill up prompt part space to WCSAM and to ECSAM for H1 August. Rates are soft and have lost some ground.
Overall, this trade lane continues to be quiet, but there were few parcels of caustic soda quoted in the market but there were no fixtures reported in the market this week. However, following the recent implementation of tariffs on Brazil has caused most market players to take a cautious approach until the picture becomes a bit clearer.
On the bunker side, fuel prices have remained volatile, on the back of the ever-changing energy prices, and as a result, week by week were significantly higher.
Source: By Adam Yanelli, Additional reporting by Kevin Callahan
