Asia-US container rates fall; Panama Canal delays implementation of draft restrictions
Rates for shipping containers from east Asia and China to the US fell this week amid continued soft demand, the Panama Canal Authority postponed implementation of lower draft restrictions, and stronger freight volumes in April pushed a trucking condition index higher, highlighting this week’s logistics roundup.
Ocean carriers were hoping for a peak season bump in June, but it has not materialised, according to Judah Levine, head of research at online freight shipping marketplace and platform provider Freightos, who said transpacific rates have retreated from a bump seen earlier in the month following general rate increases (GRIs).
Rates to the West Coast are 85% lower than the same time a year ago, while rates to the East Coast are 79% lower than year-ago levels.
Demand for goods remains weak amid a shift in spending by US consumers back towards services following the pandemic.
The National Retail federation (NRF) said import cargo volume at the nation’s major container ports is expected to be 22% lower during the first half of 2023 than the same time last year despite increased consumer spending.
Container ships 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.
LIQUID TANKER RATES
Rates for liquid chemical tankers ex-US were stable to softer this week, with decreases on transatlantic westbound and US Gulf to the Caribbean trade lanes.
Waning demand has put downward pressure on these routes, leaving ample cargo space.
PANAMA CANAL DRAFT RESTRICTIONS
The Panama Canal Authority (PCA) has delayed implementation of new draft restrictions that were initially deemed necessary because of low water levels from a drought in the region.
After receiving significant rainfall over the past several days, the PCA said restrictions of 43.5 feet initially planned to take effect on 25 June and 39 feet effective 9 July will be delayed until further notice.
Current draft restrictions of 44 feet for the Neopanamax locks and 39.5 feet for the Panamax locks will remain in effect.
The trucking market remains soft but saw some improvement in April according to FTR Transportation Intelligence.
FTR’s Trucking Conditions Index for April improved two points from March to a reading of -3.88 due to stronger freight volume and a somewhat less negative environment for financing costs.
Partially offsetting those improvements were weaker capacity utilisation and a deceleration in fuel cost decreases.
The outlook remains for negative readings through mid-2024.
“Our estimates and forecasts still show the truck freight market at close to its bottom, but the outlook remains quite weak,” Avery Vise, FTR’s vice president of trucking, said.
“Some upside potential exists for better market conditions, including a stronger automotive sector and a deeper loss of driver capacity than we are forecasting currently, but trucking companies should not count on those developments,” Vise said.
Source: ICIS, By Adam Yanelli, https://www.icis.com/explore/resources/news/2023/06/23/10898999/asia-us-container-rates-fall-panama-canal-delays-implementation-of-draft-restrictions/