Asia-US container rates mixed as carriers use smaller, more frequent hikes to halt slide
HOUSTON: Rates for shipping containers from east Asia and China to the US were mixed this week as import demand remains soft, capacity ample, but some rate hikes have gained traction.
Rates from supply chain advisor Drewry edged higher this week, as shown in the following chart.
Drewry said carriers are shifting away from traditional fortnightly adjustments, with some adopting a weekly strategy for GRIs, Drewry said.
“Instead of announcing large hikes that tend to erode quickly, carriers are now introducing smaller, more frequent increases to maintain consistent upwards pressure on spot rates,” Drewry said. “This strategy appears to have been effective this week, leading Drewry to forecast stable rates in the week ahead.”
Weekly spot rates from online freight shipping marketplace and platform provider Freightos rose this week as demand is as low as it has been since early 2023 and supply side growth is also weighing on rates.
But Judah Levine, Head of research at Freightos, said daily rates are trending higher this week, which could signal another general rate increase (GRI) attempt to start December.
Rates from global logistics company Freight Right on its TrueFreight Index (TFX) were mostly steady week-on-week.
Robert Khachatryan, Founder and CEO of Freight Right Logistics, said carriers announced 1 December GRIs of $400/FEU (40-foot equivalent unit).
“But at least one line reversed the increase within hours, and others are expected to follow,” Khachatryan said. “As the dust settles, effective spot levels are reverting back to roughly where November closed, in the $1,400–1,500/FEU range, leaving the lane essentially flat week-on-week, despite a very brief spike.”
Rates from ocean and freight rate analytics firm Xeneta also ticked higher this week, but Peter Sand, chief analyst, said fundamentals are still pressuring rates lower.
“The backdrop is still one of oversupply compared to demand and that is seen clearly in the fact rates are still not back to where they were a month ago despite a fairly chunky increase in the past week,” Sand said. “Shippers should reflect on this weaker market the next time a carrier asks for a GRI, because it would not appear to be justified against the level of demand versus capacity.”
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 MOSTLY STEADY
The US chemical tanker freight rates were unchanged this week for several trade lanes, except for the USG-Brazil trade lane as spot tonnage remains tight. The market in this direction remains firm, supported by demand for glycols and caustic soda.
Overall, there is all-basis limited spot activity to most regions and as contract of affreightment (COA) nominations are taking longer than usual for the regular vessel owners.
Carriers have tried to delay sailings but there has been very little spot space in the market leaving no other options for full cargoes and in turn impacting spot rates.
Along the route to Asia there are very few fresh cargo inquiries that were seen in the market; however, rates remain relatively stable as most space has been already booked well into the New Year.
MEG, ethanol and styrene still are being seen quoted in the market by various traders, for January loadings to Asia.
Eastbound space had not yet been fully absorbed despite the few fresh inquiries for small specialty parcels stemming from USG bound for Antwerp, and most owners are waiting for full contract nominations. However, there seems to be increased demand for ethanol along this route as several cargoes were seen quoted in the market.
Various glycol, ethanol, methyl tertiary butyl ether (MTBE) and methanol parcels were seen quoted to ARA and the Mediterranean as methanol prices in the region remain higher.
For the USG to India route, the usual cargoes of ethanol, methanol and glycols continue to be seen on this trade lane, although the level of activity seems to be a bit softer than previously seen.