Supply Chain Council of European Union | Scceu.org
Freight

Pandemic-induced container shortage pressures freight rates from Asia to US, LatAm

HOUSTON (ICIS)–Efforts to stop the spread of
the coronavirus (Covid-19) across the globe
have disrupted normal trade patterns, causing
delays and contributing to higher freight rates
from Asia, largely because of a shortage of
shipping containers in major export ports.

Chemical tanker freight rates from the US to
most regions have fluctuated a bit but have
been relatively stable since falling
significantly at the outset of the pandemic.

But container ships move polymers, such as
polyethylene (PE) and polypropylene (PP), which
is shipped in pellets.

Container ships also carry a wider scope of
cargoes, including consumer products like
electrical appliances and automobiles, so
demand for that space has risen as economies
reopened after lockdown measures because of the
pandemic.

Market participants said they have seen
container rates from SE Asia to the US spike to
as high as $4,500/container.

The supply crunch is weighing on delivery times
and forcing buyers to look for domestic supply
or other alternatives.

PP importers are facing delays receiving
shipments, or seeing shipments cancelled or
pushed out in many cases, market participants
said. Container space coming out of Asia is
very tight and prices have doubled in recent
months, with ranges between
$3,600-4,100/container, players said.

Also creating headwinds for the chemical resin
market is that shippers view resins as a
low-priority cargo, meaning that resin
shipments are often cancelled to make room for
more valuable material.

In the glycerine/fatty acids market, higher
freight costs combined with bullish feedstock
costs are leading to some demand destruction
for imported material.

Buyers in Latin America said they have seen
freight rates from Asia double.

Freight from Asia to the Atlantic coast of
South America were heard as high as
$3,500/container, which equates to about an
additional $150/tonne for resins such as
polyvinyl chloride (PVC).

Similar price hikes have been noticed by South
American buyers receiving deliveries at ports
on the Pacific Ocean, who traditionally import
many products from China and other Asian
countries.

However, because of the spikes in the last
month or so, buyers are importing resin from
India since freight costs from there have seen
smaller increases, market participants said.

In contrast, shipping costs from North America
to Central and South America remain unchanged.

A PVC trader said freight is up by 150% from
Asia and there are no containers available to
take lifts until January. On the other hand,
prices from the US to Asia are down slightly.

Focus story by Adam Yanelli

Additional reporting by Luly Stephens,
Lucas Hall, Renato Frimm, Zachary Moore, Bill
Bowen and Ai Teng Lim


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Photo: Stacks of containers at a container
terminal of the Port of Qingdao in Qingdao
city, east China (Image credit: Imagine
China/Shutterstock)

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