Asia-US container rates plunge as June hikes fail to stick

LONDON : Rates for shipping containers from Asia to the US are plummeting this week as general rate increases (GRIs) that took effect on 1 June failed to hold.

Market intelligence group Linerlytica said rates collapsed under the weight of excess capacity.

“Freight rates to the US West Coast have recorded their largest weekly losses in the last two weeks as their failure to retain any of their 1 June rate hikes have also put the peak season surcharge for contract customers at risk,” Linerlytica said in a Week 25 market update. “The early end to the transpacific peak season has not yet dragged down rates on the secondary routes that remain supported by buoyant cargo volumes, while charter rates also remain firm with very limited open tonnage.”

Carriers pulled excess capacity out of the Asia-US trade lane in May after US President Donald Trump imposed exorbitant tariffs on China and have rushed to bring back capacity once the two nations reached agreement on a new trade deal.

Rates on the global Shanghai Containerized Freight Index (SCFI) have given back all the increases from the past three weeks, with rates to the US West Coast falling by 20% week on week and rates to the US East Coast down by 7.5% from the previous week.

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.

They also transport liquid chemicals in isotanks.

STRAIT OF HORMUZ

Global shipping concerns surrounding the Strait of Hormuz in the Middle East have eased amid a ceasefire between Israel and Iran.

Lars Jensen, President of consultant Vespucci Maritime, said in a LinkedIn post on Tuesday that the strait remains fully open and operational, adding that global container shipping major Hapag-Lloyd is continuing operations through the strait per normal.

Carriers continue to avoid the Red Sea and Suez Canal because of threats of attacks from Yemen-backed Houthi rebels.

Jensen said the Houthis likely will no longer feel bound by the ceasefire they made with the US in early May regarding not attacking US vessels in the Southern Red Sea and in the Gulf of Aden following the US bombing of nuclear facilities in Iran.

The Houthis said previously that US ships in the Red Sea will be targeted if US launched any military attack against Iran.

Source : ICIS