Rates for shipping containers from east Asia and China to the US edged lower this week as a pre-Lunar New Year demand bump failed to emerge, or has already peaked, which suggests carriers did not move forward with planned mid-month hikes.

Supply chain advisors Drewry said rates fell even as carriers increased the number of blank sailings to counter softening demand following the end of the pre-Lunar New Year cargo rush.

Rates this week fell by 12% to the West Coast and by 11% to the East Coast and have fallen steadily since early January, as shown in the following chart from Drewry.

Drewry expects freight rates to decline further in the coming weeks.

Rates from online freight shipping marketplace and platform provider Freightos fell by single digits to both coasts after reaching January highs the previous week.

Judah Levine, head of research at Freightos, said rates on transpacific routes are still likely to stay elevated in the near term as the holiday approaches and then face downward pressure as demand eases post-Lunar New Year, with carriers already announcing blanked sailings.

Spot rates on the Shanghai Containerized Freight Index (SCFI), which tracks rates for containers leaving Shanghai, fell this week for the third week in a row.

Rates from global logistics company Freight Right on its TrueFreight Index (TFX) were largely stable.

Robert Khachatryan, founder and CEO of Freight Right Logistics, said the attempt by carriers to aggressively raise rates in early January has largely failed, as spot prices have retreated due to underwhelming volumes.

“After a short-lived test of higher pricing at the start of the month, rates are now stabilizing at levels closer to the ‘fair market’ baseline rather than the peak-season highs carriers had hoped for,” Khachatryan 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), are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers.

They also transport liquid chemicals in isotanks.

LIQUID TANKER RATES EX-USG MIXED
Chemical tanker rates from the Americas were mixed this week as several trade lanes were lower or unchanged with only one route rising. Limited space remains available in January or early February for many routes in all directions.

From the USG to Rotterdam, there has been an increase in activity on this route and space for January is looking to be full, minus a few tanks. Caustic soda, monoethylene glycol (MEG), and styrene have been said to be popular commodities along this trade lane. According to one broker most regular COA (contract of affreightment) owners have advised that they are already working on February voyages, as January is all but completed. On the other hand, the CPP (clean petroleum products) market has been strong and therefore leaving the chemical sector for the time being, supporting upward pressure for larger parcels.

From the USG to Asia, there are very little gaps of vessel space showing in January. Therefore, there is a backlog of outsiders looking for opportunities, which weighed on spot rates this week, although most of the inquiries seen in the market seem to be more focused on other routes. Most owners have advised that COA nominations for February are coming in strong, particularly for specialty chemicals.

As a result, smaller parcel freight has taken a steep drop from January loadings, while larger parcel sizes seem destined for the same.

From the USG to Brazil, there are a few outsiders open for the end of January to early February, along with some regulars with some small pocket space. This trade lane is expected to face some downward pressure as the list of fully open vessels presently continues to grow, according to one market participant. However, there were a few fixtures noted for a large parcel of ethanol and several other traders inquiring.

From the USG to India overall the market remains steady as there were several spot inquiries to WC India. One trader is seeking space for a large parcel of acetic acid (10,000 tonnes), while another is looking for 25,000 tonnes of MEG for February, additionally several parcels of ethanol remain actively quoted in the market pushing rates a bit higher.

Source: ICIS Additional reporting by Kevin Callahan