<\/p>\n
The US-Iran conflict and subsequent closure of the Strait of Hormuz is putting upward pressure on both liquid tanker and container rates, increasing costs for shippers regardless of trade lane, while at the same time costs to move freight domestically via rail and truck are also rising amid changing federal and state regulations.<\/p>\n
All these topics will be top of mind for participants at this year\u2019s International Petrochemical Conference (IPC) in San Antonio, Texas.<\/p>\n
US-IRAN CONFLICT<\/strong> Initial impacts of the closure were isolated in the Middle East region, but soaring crude prices and geopolitical premiums have spread across the globe and are being felt in most segments.<\/p>\n Bunker fuel prices have surged, more than doubling in the weeks since the crisis began, as shown in the following chart.<\/p>\n Singapore, for example, saw very low sulphur fuel oil (VLSFO) prices at $1,120\/tonne on 16 March, up from $490\/tonne on 19 February.<\/p>\n Whether through higher emergency fuel surcharges or geopolitical premiums, costs to move goods have surged.<\/p>\n Market participants told ICIS that they have seen transatlantic styrene freight increased to $300\/tonne from $80\/tonne one month ago.<\/p>\n War risk premiums are being added to ocean freight, especially anything destined for India, where rates have risen to $3,000-$3,500\/FEU (40-foot equivalent unit), which in the polyvinyl chloride (PVC) market is about $130-$150\/tonne, up from $50-$60\/tonne.<\/p>\n TANKER RATES SURGE<\/strong> These issues have prompted freight rates to surge, which is largely due to the limited amount of available space.<\/p>\n Costs are further pressured by higher bunker fuel costs that have also contributed to the jump in rates. Owners and charterers are now both faced with higher logistics costs and no end in sight.<\/p>\n Freight levels keep rising as owners struggle to rebalance their fleets to provide any support to the market. While space availability continues to shrink and bunker fuel rises, this in turn will limit any rebalancing of chemical cargoes in most trade lanes.<\/p>\n These significant increases would most likely lead to a few different scenarios such as substantial rate increases, fewer port calls and potential supply chain disruptions for US manufacturers relying on specialty chemical trade flows.<\/p>\n Uncertainty surrounding the conflict persists through much of the industry, weighing on confidence.<\/p>\n As a result, most owners and charterers are taking a wait-and-see approach while looking for longer term solutions.<\/p>\n ASIA-US CONTAINER RATES<\/strong> Only 2-3% of global container volumes transit the Strait of Hormuz, so the closure has had more of an impact on tanker shipping.<\/p>\n Still, major container carriers implemented emergency operations that largely avoided the Middle East.<\/p>\n Shipping market intelligence firm Linerlytica said carriers have scaled back rate hikes scheduled for March on the Asia-Europe and transpacific routes given the absence of any capacity or box equipment shortage, with congestion in southeast Asia also starting to ease.<\/p>\n Linerlytica also said some major carriers have resumed bookings in and out of the Middle East by offering alternative gateways through the Red Sea and Arabian Sea.<\/p>\n CMA CGM has resumed Red Sea transits after a brief 10-day suspension, with an Asia-Mediterranean service returning to the Suez Canal on 10 March.<\/p>\n \u201cOther smaller carriers have retained their Suez and Red Sea routing as Jeddah and King Abdullah becomes key alternative gateways into the Gulf states, supplementing existing cargo moving via Oman and outer UAE ports,\u201d the firm said.<\/p>\n Linerlytica said congestion at neighboring ports across south and southeast Asia have started to ease following the initial disruptions from the closure of the Strait of Hormuz and the congestion has been less than expected.<\/p>\n \u201cSingapore bore the brunt of the initial shock, but congestion has started to clear after delays peaked at three-and-a-half days while the other main southeast Asian hubs have been able to limit delays to less than one day,\u201d Linerlytica said.<\/p>\n On the Indian subcontinent, displaced Middle East traffic is still building up especially in Mundra and Colombo, Linerlytica said, but the impact has so far been kept under control with delays averaging less than two days and traffic flow expected to peak in the coming week.<\/p>\n \u201cAttention is shifting towards bunker availability, with supply reported to be tightening across Asia with China the only key region where availability has not been significantly affected,\u201d the firm said.<\/p>\n Container ships and costs for shipping containers 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), are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers.<\/p>\n They also transport liquid chemicals in isotanks.<\/p>\n DOMESTIC RAIL, TRUCKING ISSUES<\/strong> But multiple chemical industry trade groups, including the American Fuel & Petrochemical Manufacturers (AFPM), the Alliance for Chemical Distribution (ACD), the American Chemistry Council (ACC) and the Rail Customer Coalition (RCC) voiced opposition to the merger, saying the deal would limit competition and raise costs for shippers.<\/p>\n The Surface Transportation Board (STB) on 16 January rejected the initial merger application after finding that it was incomplete, the regulator said.<\/p>\n The railroads advised the STB that they will resubmit on 30 April.<\/p>\n Chem trade groups have also lauded the STB for its recent decision to repeal a rule that governs the prescription of reciprocal switching.<\/p>\n The chemical industry has supported reciprocal switching and argued that it would open rail carriers to more competition and improve service. Under reciprocal switching, one railroad carrier handles a customer\u2019s cargo on behalf of another railroad carrier.<\/p>\n In trucking, some market participants have said they are beginning to see tightness in the industry, which could be a result of increased enforcement on things such as English language proficiency from the US Department of Transportation (DOT).<\/p>\n The new measures include requiring commercial driver\u2019s license (CDL) tests be administered in English, upgrading the registration system with identification verification and cracking down on non-compliant CDL training centers and carriers.<\/p>\n The American Trucking Associations (ATA) supports the administration\u2019s actions.<\/p>\n \u201cWe commend the Trump Administration for taking decisive action to strengthen the integrity of our commercial driver training system and reinforce its commitment to safer roads,\u201d the ATA said. \u201cThe proposed removal or voluntary withdrawal of more than 550 CDL training providers from the national Training Provider Registry makes clear there is no place in trucking for sham schools that fail to meet federal requirements.\u201d<\/p>\n Diesel fuel prices have surged, adding more costs for moving freight, and are now above $5\/gal for the first time since 2022, according to motorist group AAA.<\/p>\n Average national diesel prices were $4.78\/gal a week ago and $3.65\/gal a month ago, AAA said.<\/p>\n In the US, chemical rail car loadings represent about 20% of chemical transportation by tonnage, with trucks, barges and pipelines carrying the rest.<\/p>\n Chemicals are generally shipped in tank cars (liquids and liquefied gases), hopper cars (dry commodities) and some boxcars (dry bulk or packaged chemical products). <\/a><\/strong> <\/a><\/p>\n","protected":false},"excerpt":{"rendered":" … being added to ocean freight<\/span>, especially anything destined for … largely avoided the Middle East. 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Shipping through the Strait of Hormuz in the Arab Gulf has been effectively halted following attacks by US and Israel on Iran, which has caused crude oil prices to spike since about 20% of global crude oil transits the narrow waterway between Iraq and Iran.<\/p>\n
The chemical tanker market has been challenged with ongoing structural inefficiencies further exacerbated by the closure of the Strait of Hormuz.<\/p>\n
Rates for shipping containers from east Asia and China to the US have risen by $100-$300\/FEU in the weeks since the US initiated its attack on Iran on 28 February.<\/p>\n
One of the biggest issues facing chemical companies in the US is the proposed merger between Class 1 railroads Union Pacific (UP) and Norfolk Southern (NS), which the railroad companies say will improve service.<\/p>\n
Source: ICIS, by Adam Yanelli and Kevin Callahan, https:\/\/www.icis.com\/explore\/resources\/news\/2026\/03\/18\/11189903\/afpm-26-us-shipping-supply-chains-pressured-as-middle-east-conflict-raises-costs\/<\/a><\/p>\n