Asia-US container rates fall as capacity continues to outweigh demand
HOUSTON: Rates for shipping containers from east Asia and China to the US fell significantly week on week as available capacity continues to outstrip demand, according to shipping analysts.
Rates from global logistics company Freight Right on its TrueFreight Index (TFX) experienced significant weekly decreases, as shown in the following chart.
Robert Khachatryan, founder and CEO of Freight Right Logistics, said spot rates to the West Coast continued their rapid decline this week, now falling to the $1,350-1,500/FEU (40-foot equivalent unit) range, with some carrier-specific lows touching $1,350/FEU.
“This marks the fifth or sixth consecutive weekly drop, driven by slow demand and an extremely short holiday week in the US,” Khachatryan said.
Rates to the East Coast also fell, now averaging about $1,900/FEU, shrinking the typical spread between West and East Coast from $800-900/FEU to just $600-700/FEU.
“Both lanes are effectively at or near their ‘rock-bottom’ levels for the year,” Khachatryan said. “The market anticipated declines in late November, but not to this extreme, and not at month-end heading into December.”
Rates to the West Coast from online freight shipping marketplace and platform provider Freightos plunged by 32% from the previous week and fell by 8% to the East Coast.
Judah Levine, head of research at Freightos, said rates remain slightly above the low for the year, hit in early October.
“The current overcapacity on the East-West lanes is the main reason that carriers’ November transpacific GRIs (general rate increases) – which had pushed West Coast rates up by $1,000/FEU this month to about $3,000/FEU – have now fizzled,” Levine said.
Market intelligence group Linerlytica said the outlook for the rest of the year remains gloomy as TEU-mile (20-foot equivalent unit-mile) demand growth has slipped below the growth in vessel supply.
“Carriers’ reluctance to withdraw capacity during the slack winter season has hurt freight rates across key routes with the transpacific rates facing the greatest stress,” Linerlytica said.
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.
LIQUID TANKER RATES TO BRAZIL SURGE
US chemical tanker trade lanes were overall unchanged this week for most routes, while vessel demand continues to remain soft. Overall, the spot market was quiet due to a holiday shortened trading week.
One exception is rates for the USG to Brazil trade as they perk up and as interest to this region remains steady, supported by steady COA (contract of affreightment) volumes. Space is becoming very tight until the end of the year, keeping rates firm in this direction.
USG to ARA remains muted for spot and solid for contractual cargoes and as CPP (clean petroleum products) tonnage continues to participate in the chemical sector. The market to this region has had a few new inquiries, but COA volumes have increased, supporting the trade lane. If it persists, it could continue to pressure the market even further.
For the USG to Asia, there seems to be limited available space as COA volumes remain strong. Due to the lack of any new spot fixtures rates remain unchanged. Although, if this should persist, rates could be pressured upward. There seems to be interest in December for the usual parcels of glycol, methanol, and ethanol.
Bunker prices remain lower mainly due to the continued plunge in energy prices week on week.
Source: ICIS