LONDON (ICIS)–The shipping woes that have
dogged the chemicals sector for months show no
sign of abating, with disrupted international
trade flows driving up prices and limiting
availability, with European issues exacerbated
by confusion and gridlock following the UK’s
departure from the EU.
Shipping costs have skyrocketed over the last
few months, with market sources reporting that
they have been quoted six times or more the
level seen in mid-2020, when prices first
started to climb.
““Every day and week the sea freight costs are
going up,” said a European trader.
Supply chain disruption in the early days of
the pandemic started to drive up costs, but the
expense of shipping kicked into a phase of
exponential growth from
November, as the Asia Pacific region’s
economic recovery started to re-map global
“It began in the US then China, then Korea,
Indonesia. For some more expensive raw
materials I heard people willing to pay $8,000
for product to be sent from Asia to Europe, but
there were no containers. It won’t be over in
one month… everyone has a shortage, everyone is
desperate,” said a polyethylene terephthalate
A return to near standard production levels in
China and beyond, coupled with a sharp increase
in online goods orders in Europe, which
continues to languish under high infection
rates and social distancing measures, has
driven up prices, delayed delivery schedules
and container shortages.
The extent is relatively unprecedented,
according to a plasticizers seller.
“There is a shortage of isocontainers and it
definitely disrupts supply chains, and in
certain regions there is a shortage of steel
drums and other packaging items, I’ve not seen
that before,” it said.
Shipments from Asia are being left with no
product to load for the return journey, meaning
that shippers either need to absorb the cost of
a stock-free return journey or for vessels and
containers to remain in port until full enough
to head back to Asia.
This is causing delays, with the normal rhythm
of global trade grinding to a halt and
containers are less likely to be where they are
needed. It also leading to increased reluctance
on both sides to commit to the long ocean
journey when it is unclear whether it will be
possible to bring the ship back.
“Sea freight costs have increased
significantly, normally lead time is one month,
but is now six to eight weeks,” said a European
titanium dioxide (TiO2) trader.
“There are no real trans-shipments-within China
to Europe… some freight contracts have been
cancelled,” it added.
“Last year, the cost to deliver one 40-foot
container from China to St Petersburg would be
$2,000, now we pay $11,000 and it is still hard
to get it in time,” said a Russia-based
The supply chain imbalances are affecting all
markets, meaning that chemicals players are
finding themselves fighting for container space
for raw materials against importers and
exporters of high-margin products such as
gaming consoles and televisions.
“Some freight contracts have been cancelled,”
said the TiO2 trader. “I think it has to do
with a lot of consumer demand/electronics, flat
screens have a higher margin than TiO2.”
Players had long expressed hopes that the Lunar
New Year holiday in China, taking place in
February, would help to alleviate the
situation. Chinese factories customarily shut
down for the two-week period.
This could potentially allow a lull for ships
to move back to Asia and gluts at some European
ports to clear.
These hopes may be dashed by signs that
controls on travel
amid a slight spike in China domestic
coronavirus infection rates could result in
fewer factory closures than expected, meaning
the situation could continue into the next
The Chinese government has placed various
cities and provinces in the northern region
back into lockdown on the back of a higher
infection levels, including Hebei, Heilongjiang
The extent of demand backlog for shipping
containers means that, even in the event of
more widespread production stoppages in China,
prices could remain significantly higher than
normal for some time.
“We saw container rates at… $5,200 for January
and $9000 for Feb shipments for Thailand to
Antwerp,” said a European epichlorohydrin (ECH)
source. “Our supply chain manager says that by
March it should normalise, once stranded
containers are back, but we don’t see this
Port congestion and delays due to coronavirus
have exacerbated the delays across the globe,
with an Africa-based source noting the same
issues as suffered in Europe.
“Empty container availability is tight, most
cargoes are not turning around as quickly. A
lot to do with Covid, there is not enough
drivers or dock yard workers,” it said.
“Containers go inland and there are not enough
drivers to bring it back.”
Front page picture: Containers of a freight
train at a logistics centre in Malaszewicze,
Poland; archive image
Focus article by Tom Brown
Additional reporting by Marta Fern, Heidi
Finch, Ben Lake, Jane Massingham, and Caroline
Infographic by Yashas Mudumbai