SHIPPING: Asia-US container rates rise; carriers bring back capacity amid tariff pause

HOUSTON (ICIS)–Asia-US rates for shipping containers rose this week, leading ocean carriers to rush to ramp up capacity to handle an expected surge in bookings.

Rates from online freight shipping marketplace and platform provider Freightos rose by 3% to both US coasts, while rates from supply chain advisors Drewry showed a 2% increase on rates from Shanghai to Los Angeles and a 4% rise in rates from Shanghai to New York, as shown in the following chart.

Following the latest US-China trade developments, Drewry expects an increase in spot rates in the coming week as carriers are reorganizing their capacity to accommodate a higher volume of cargo bookings from China.

Kyle Beaulieu senior director, head of ocean Americas at Flexport, said during a webinar this week that carriers who initiated blank sailings and discontinued services to the US are now resuming services.

Beaulieu said there were 10 China-US services that were halted, and as of today, six are planning to resume from Week 22 to Week 24.

Beaulieu said ports in the Pacific Northwest have been the biggest beneficiaries so far as that is the shortest route to the US.

Alan Murphy, CEO, Sea-Intelligence, said carriers who were reducing transpacific capacity due to the decrease in bookings from China amid 145% tariffs are now working to ramp up capacity prior to the 14 August deadline.

This means that typical peak season volumes now must be shipped no later than mid-July.

Judah Levine, head of research at Freightos, said there is still confusion on whether July and August deadlines mean goods need to be loaded at origins by those dates – as was the case with the 9 April tariff deadline – or that goods must arrive in the US by then.

“The latter would significantly shorten these lower-tariff windows,” Levine said. “Ocean shipments from Asia would have to move in the next week or two to arrive before 9 July.”

Levine noted that carriers have separately come out with mid-month general rate increases (GRIs) from $1,000-3,000/FEU (40-foot equivalent unit) and have similar GRIs planned for 1 June and 15 June with aims to get rates up to $8,000/FEU.

“If successful, rate levels would be about on par with the Asia – US West Coast 2024 high reached last July,” Levine said. “Daily transpacific rates as of Monday have already increased about $1,000/FEU to the East Coast and $400/FEU to the West Coast to about $4,400/FEU and $2,800/FEU, respectively.”

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 upward pressure for several trade lanes.

There is upward pressure on rates along the US Gulf-Asia trade lane as charterers are seeking to send cargos to the region following the pause on tariffs. The announcement caused a significant uptick in spot activity.

The increase in interest should be significant but almost certainly short lived as cargoes rush to arrive prior to the 90-day expiration date. Several parcels of monoethylene glycol (MEG) and methanol were seen quoted in the market.

Similarly, rates from the USG to Rotterdam were steady this week, even as space among the regular carriers remains limited. Contract tonnage continues to prevail and given the limited available space; spot demand remains relatively good. Several larger sized cargos of styrene, methanol, MTBE and ethanol were seen in the market.

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

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 contract of affreightment (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 lower energy prices, as a result week over week were softer.

Additional reporting by Kevin Callahan

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