According to Xeneta, the carrier segment appears to be negotiating the COVID-19 storm with some success, at least in terms of safeguarding its vital long-term ocean freight rates.
After two months of slight rate declines, the index crept up 0.1% in July. It is now just 0.1% down through 2020 and 0.8% down year-on-year.
Xeneta CEO Patrik Berglund attributes the relatively minor movements to the proactivity of owners, as they continue to perform a “delicate balancing act” with supply and demand.
Difficult decisions
We’ve seen contracted rates holding comparatively steady while spot rates have actually been rising from April and through May and June. Given the short- and mid-term macro-economic situation that’s taken many by surprise. The key has been carriers conducting a delicate balancing act to remove tonnage and adjust routes in accordance with demand. However, it’s difficult to maintain that for the long-term and, let’s face it, the virus is not going anywhere fast – so what’s the next step?
says Mr. Berglund
Key developments
In addition Xeneta’s regional analysis of major trading routes painted a mixed picture for July. After four months of decline, imports on the European index increased by 0.2% (down 2% year-on-year), while the export benchmark registered its steepest fall since October with a decline of 2%. That said, it remains 3.4% up year-on-year.
Moreover, developments in the Far East were negative, with a significant 4.5% fall in import rates and a 1% drop in the export figure. Year-on-year the benchmarks are up 1.6% and down 1.3% respectively.
As for the US, its figures were varied for the month of July, with imports declining marginally by 0.1% (0.4% down against July 2019) while exports registered a healthy rise of 1.2%, reversing two months of decline. However, despite the increase, the index remains down 3.3% year-on-year and has now shed 2.2% of its value since the end of 2019.
Concluding, the Xeneta CEO highlights:
For example, the virus continues to ravage the US and, given the scale of unemployment, demand will remain subdued, creating an impetus to withdraw capacity. Meanwhile, consumer spending has fallen by 1.8% in China (against forecasted growth of 0.5%) and that suggests any recovery may take time. However, it’s also important to note that China reported impressive second-quarter GDP growth of 3.2% year-on-year, beating market expectations and reversing the decline of 6.8% in Q1
