Rates for shipping containers from east Asia and china to the US were mostly higher this week, liquid chemical tanker rates ex-US Gulf remained largely stable, and the Panama Canal Authority issued further draft restrictions — the key developments in shipping news this week.

Panama Canal Lowers Draft Limits

The Panama Canal Authority (PCA) is lowering draft limits at its neopanamax locks beginning 26 August, as a strengthening El Niño contributes to declining water levels at Gatun Lake, the freshwater reservoir that feeds the locks.

Draft limits will be reduced to 48 ft (14.63 m) on 26 August and further to 47.5 ft on 3 September. These mark the fourth and fifth draft reductions this year. Lower draft limits mean vessels must either reduce cargo loads or seek alternative routes — including the longer passage around South America — potentially adding transit time and cost to journeys between Asia and the US East Coast. The PCA said it will continue to closely monitor Gatun Lake water levels and hydrological projections, and will announce additional adjustments as necessary.

El Niño — a recurring climate pattern characterized by warmer-than-normal waters in the eastern and central tropical Pacific — tends to increase vertical wind shear, which is unfavorable for Atlantic hurricane formation and intensification. The phenomenon can also reduce rainfall around Panama, which has historically contributed to lower Gatun Lake levels.

The latest advisory from the US National Oceanic and Atmospheric Administration (NOAA) confirmed that El Niño is present, with equatorial sea surface temperatures (SSTs) above average across the central and eastern Pacific Ocean.

"El Niño will strengthen through the end of the year, with a 97% chance it will persist through early spring 2027," NOAA said.

Container Rates Rise

Asia-US container rates faced upward pressure this week, driven by a combination of early peak season demand lasting longer than anticipated, carriers managing capacity through scheduled blank sailings, and the partial success of 1 August rate hikes.

Rates to the US West Coast currently range between $5,800–$7,200/FEU (40-foot equivalent unit), while rates to the East Coast range between $7,900–$10,250/FEU.

Supply chain advisory firm Drewry reported that carriers successfully implemented general rate increases (GRIs) as volumes held firm into August. Port congestion across central and south China continued to constrain capacity, providing further support to freight rates. With eight blank sailings scheduled for next week, Drewry expects less rate volatility in the coming weeks.

Peter Sand, chief analyst at ocean and freight rates analytics firm Xeneta, said carriers continue attempting to balance soft demand against their eagerness to deploy capacity.

"This is done by blanking sailings on services where weekly departures were scheduled only to be cancelled at the last minute," Sand said. "Tactics like these are spooking shippers, who thought they could rely on the announcements only to find their cargo not moving."

Shipping market intelligence firm Linerlytica noted that cargo demand remains strong out of Asia, and persistent port congestion in China has created space and equipment shortages that have kept freight rates at elevated levels.

Not all analysts expect rates to stay high. Robert Khachatryan, founder and CEO of Freight Right Global Logistics, said some of the GRIs have not been widely accepted in the market.

"Forwarders are already using contract allocations, blended rate structures, and special pricing to offer practical rates," Khachatryan said. "Based on current booking activity, the August increase is expected to be largely erased within days, returning West Coast rates to approximately where they stood before the increase."

Rates on the Shanghai Containerized Freight Index (SCFI), which tracks rates for containers leaving Shanghai, rose 2.19% for the second consecutive week following three down weeks in a row. Rates on the NYSHEX Freight Index (NYFI) rose 1% to the West Coast and fell 3.9% to the East Coast.

Container shipping costs are relevant to the chemical industry because while most chemicals are liquids shipped in tankers, container ships transport polymers such as polyethylene (PE) and polypropylene (PP) in pellet form. Titanium dioxide (TiO2) is also shipped in containers, along with liquid chemicals in isotanks. For East Coast services that transit the Panama Canal, the new draft restrictions add another variable that could influence routing decisions and effective capacity in the months ahead.

Liquid Tanker Rates

US chemical tanker freight rates ex-US Gulf (USG), as assessed by ICIS, were mostly unchanged week on week. The US Gulf Coast is a major hub for chemical and petrochemical exports, supported by abundant natural gas liquids feedstock from shale production, making USG tanker rate movements a key barometer for global chemical trade flows.

Trade routes from the USG remain slow, with enquiries continuing at a sluggish pace and largely dominated by contract of affreightment (COA) volumes. Spot cargo moving into Asia remains muted following escalating tensions in the Middle East and precautionary measures for Panama Canal transits. As a result, rates held stable from the previous week.

Usual cargoes of methanol, monoethylene glycol (MEG), and ethanol were seen quoted in the market for end-August to early-September lifting.

Rates from the USG to Rotterdam are experiencing a similar trend, with that market also remaining stable. Most regular carriers noted little prompt space availability, though they indicated ample space for the second half of August. Should this trend continue, rates could face further downward pressure. Large parcels of methanol and caustic soda, as well as parcels of styrene, were seen quoted in the market. COA volumes remain fairly steady heading into the first half of August.

On the USG-to-Brazil route, the market has remained relatively unchanged and is experiencing some downward pressure. While the market continues to be inactive, it is further influenced by freight availability and shifting trade lane dynamics. Demand remains soft, particularly for larger parcels, adding to the downward pressure.

For the USG-to-India trade lane, the market remains extremely soft with ample space available as outsiders entered the market. This has placed downward pressure on rates, which fell this week and could decline further if conditions persist. Several enquiries were seen for MEG, methanol, ethanol, and vinyl acetate monomer (VAM).

Source: By Adam Yanelli, additional reporting by Kevin Callahan, ICIS —