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FEATURE: Supply chain logjams stymie resin exports


Containerized imports exacerbate chassis, truck driver squeeze

Export-bound resin increasingly stuck waiting to be loaded on ships

  • Author
  • Kristen Hays    David Lademan    Greg Holt
  • Editor
  • Kshitiz Goliya
  • Commodity
  • Petrochemicals Shipping
  • Tags
  • United States

An influx of finished goods imports has caused logjams in exports of US resins, such as polyethylene and polyvinyl chloride, exacerbating already tight availability of truck drivers and chassis on which to move containers, market sources said.

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"The biggest thing is the import of finished goods into every port – Houston, New Orleans, Savannah, Charleston and the West Coast," a veteran resin trader said. "They can't get the finished goods moved inland fast enough to get the ports clear."

Those finished goods, largely from Asia, had faced holdups in deliveries to the ports of Los Angeles and Long Beach for months, prompting container ships to divert to other ports, with full containers placed on chassis awaiting trucks to move them out.

The Port of Houston has seen import volumes grow by an average of 22% for the 10 months through December 2021, according to data from the port. Similarly, the Port of Charleston and surrounding smaller ports in South Carolina has seen an average growth of 32% per month versus the previous year since March of 2020, the port data showed. Imports peaked in June with 56% growth against the year.

There were nine container ships waiting to unload at the Port of Houston on Feb. 8, Platts cFlow trade-flow analytics software showed, with six additional vessels at berth.

"Supply chain issues will become even more visible, can be two months to get product from port to shelf," said one US freight forwarder. "By early April we could see West Coast rates actually fall and East Coast increase."

Tight chassis, truck driver availability

The influx has squeezed already tight chassis availability at resin packaging warehouses, where plastic resins get packaged and loaded onto containers for domestic delivery via truck or rail or to be transported by truck to ports for export.

Without a chassis or a truck driver to haul it, empty containers cannot be taken to such warehouses to be filled with packaged resin, traders said.

Resin packaged in 55-lb bags that are stacked on pallets awaiting loading and transport has increasingly filled warehouse space, sources said. That can leave warehouses unable to take in more resin until packaged product gets moved out.

"They are all packed to the gills," a trader said of packaging warehouses.

Other traders said they have cargoes sold in late 2021 that have yet to get loaded onto a ship for export.

"We're still loading product we sold in December," a trader said. "Some orders were delayed for February shipment."

In addition, container ships do not always stop at ports to load cargoes, leaving traders who booked space to hope that the next one stops. Ocean carriers have discretion whether to stop regardless of cargoes waiting to move out, and if a cargo booked on a certain ship is not loaded, it rolls to the next one, and can roll multiple times.

"We've tried to move exports from the East Coast to Japan, and we cannot find vessel space," a trader said. "There's no guarantee they can provide the space."

Another trader said about 26 containers of resin purchased and packaged in November was stuck throughout December and January.

"There are not enough truckers to come bring empty containers to warehouses, and the warehouses say they are booked out," the trader said.

Another concern for US resin traders is strained ability to move exports to South America, particularly countries on the West Coast of South America, such as Peru, Chile and Ecuador. Those markets depend heavily on supply from the US, and congestion at transshipment sites in Panama and Colombia have held up deliveries, traders said.

"We have customers who have faced those issues, with cargo held for one to two months," a trader said. "There's no way we can do anything."

US resin exports in Q1-Q3 2021 fall

Five US ports dominate waterborne resin exports: Houston, New Orleans, Charleston, New Orleans and Savannah. In the first three quarters of 2021, those ports shipped out 6.57 million mt of polyethylene, polypropylene and PVC, or 97% of 6.77 million mt exported via ship, according to US International Trade Commission data.

Of the total, 65%, or 4.28 million mt, exited the US through Houston, home to the largest cluster of resin plants in the US and the second-largest petrochemical port in the world behind Rotterdam.

However, outflows from those five ports were 38% lower in the first three quarters of 2021 compared to 10.6 million mt shipped out during the same span in 2020, the data showed.

Severe weather events in 2021 contributed to that decline. These included a deep freeze that hit the US Gulf Coast in mid-February and Hurricane Ida's late August landfall in Louisiana, both of which forced lengthy production shutdowns.

Producers also reduced sales into export markets to feed strong domestic demand for resin throughout 2021, market sources said.

While some resin producers and buyers expect the logjams to get untangled by mid-2022, others were not as optimistic.

"I don't see any end in sight this year," a veteran resin trader said.