Any hopes of a revival in long-term ocean freight shipping rates were short-lived after the latest data from Oslo’s Xeneta indicated the market is once again in decline.
In September, the Xeneta Shipping Index (XSI), which tracks real-time rates developments on a month-to-month basis, revealed global long-term contracted rates had increased for the first time in 12 months.
This raised the question of whether it was a sign of a resurging market or merely a temporary halt in its decline.
As informed, it now appears September was indeed a false dawn after data released by Xeneta this week showed October reverted to a now familiar downward trend with the Global XSI dropping by 2.6% to 165.3 points.
Carriers have had some success in capacity management, limiting the impact of the 3.3% decrease in global shipping volumes year to date. However, this hasn’t been enough to support sustained rate increases on a global basis.
…said Emily Stausbøll, Xeneta Market Analyst.
The answer to the contrasting fortunes on the XSI in September and October could be found in the Far East, where we saw some unusual, and seemingly one-off, behaviors. For example, Korea to Australia and New Zealand grew 2% in September yet dropped 31.1% in October.
..added.
Freight shipping companies have already endured 62.2% being wiped off market prices in the past 12 months and, far from the tides turning in their favor, the situation may get worse before it gets better.
Significant changes in Global XSI® will come in the New Year following the tender season when many shippers will be signing new contracts at lower rates than the ones they are replacing.
..Stausbøll said.
European Imports was the only XSI® sub-index to grow in October, up by 3.0% to 187.5 points. However, when we turn our attention to European exports the story is very different, falling by 11% in October to 164.3 points.
To provide an example of the dire situation carriers find themselves, the average of all valid long-term rates between North Europe and China is USD 95 per FEU, excluding terminal handling charges.
..Stausbøll said.
Furthermore, the index for exports out of the Far East fell by 6.9% in October to 152.8 points. This is a 75.1% drop from a year ago, and the lowest this index has been since January 2021. The index for imports into the Far East fell to 108.8 points in October, 6.2% lower than September and the lowest any index on the XSI® has been since October 2021.
US imports fell 3.4% to 186.8 points on the XSI® in October – but without successful capacity management by carriers the situation could have been much worse. With volumes dropping 15% year to date – more than any other major trade – we would expect the index for US Imports to show the most severe decline. However, this has not been the case, with rates on the XSI® falling broadly in line with other major trades.
