A continued shortage of shipping containers in Asia is putting upward pressure on freight costs – where some importers are paying three times more than normal – and delaying delivery times as securing space to ship goods has become more difficult.
“It is the perfect storm,” said a plastic resin distributor based in Canada who has never seen freight costs spike like this. “This pandemic has awakened a new sense of domestic self-sufficiency with respect to your supply chain.”
Most chemicals are liquids and are moved in chemical tankers. But container ships move polymers, such as polyethylene (PE) and polypropylene (PP), which is shipped in pellets.
The outbreak of the coronavirus, and efforts to stop the spread, have disrupted normal trade patterns in part because of the uneven way the virus moved across the globe.
China’s economy has rebounded after being among the first to restart following mitigation efforts, and the country’s exports have soared. But lockdown measures in other regions have contributed to delays in containers returning to Asia.
Polymer importers said this week that spot container freight rates have risen to around $5,000-5,500/container. In addition, shippers need to pay around $1,000-1,500/container to guarantee vessel space, putting effective container rates at around $7,000/container.
This equates to freight costs of about $200-300/tonne, almost three times higher than the typical costs of $70-100/tonne.
The change in trade flows and global demand for containers is also impacting other regions, such as Africa and India, where exporters are seeing shortages because shippers out of Europe, the US and the Middle East want to push as many containers as possible to Asia.