Xeneta Reveals Sudden Container Rates Decline in All Major Shipping Corridors

109

After two months of steady increases in long-term contracted rates for containership operators, the latest XSI Public Indices report from Xeneta shows a reversal of fortunes, with rates falling by 4.2%, says an article published in Logistics Middle East.

What does the report say?

According to the report’s crowd-sourced data – covering over 160,000 port-to-port pairings, with 110 million data points – all major trading corridors saw month-on-month declines, plunging the indices to its lowest level since June 2018.

DP World container traffic falls 8.8% year-on-year for UAE in first quarter
Oslo-based Xeneta, the leading ocean freight rate benchmarking and market analytics platform, produces the monthly XSI with data gathered from the world’s foremost shippers and freight forwarders.

Challenging Terrain

This up-to-the-minute information allows the firm to map the rapidly shifting rates landscape, delivering intelligence that helps industry stakeholders get optimal value for assets and cargoes.

However, unfortunately for those on the asset owner and operator side, notes Xeneta CEO Patrik Berglund, that map is currently showing somewhat challenging terrain.

A market in flux

“This is a real turn of events,” Berglund said. “The past two months have seen the industry halt a long-term rates decline and achieve some much needed respite, with rates rises of 2.5% in February and a more modest 0.5% in March. In that context a 4.2% fall comes as a slight shock to the system and will have many in the industry reassessing the short- to medium-term forecasts for their businesses.”

The reasons for decline?

“The reasons for the decline are complex, but certainly overcapacity on the European trades (with Ocean Alliance increasing activity and new slots for a standalone HMM service) and continued fallout from the US-China trade war (where shippers initially front loaded cargoes to avoid additional cost) have added to longer term structural issues and political/economic uncertainty,” he said.

“In short, suppliers have benefited from a market in flux due to trade wars, IMO, socio-economical factors, like Brexit, and now the situation is turning. As always, uncertain waters may lie ahead for the contract market.” 

No safe haven

April’s XSI Public Indices shows rates figures firmly in the red. European imports fell by 4.8% (2.3% down on year end 2018), while exports declined by 1.9% (2.4% down for the year).

For the Far East the import benchmark dropped by 2.1% while exports slumped 3.6%. The export figure has now fallen by 4.5% since the start of the year and 9.7% between July 2018 and April 2019, indicating a prolonged downward rates trend for the segment to contend with.

Drum Up Investments?

KIZAD executives visit China to drum up investment US trades have suffered the same fate as their counterparts in April, derailing what was beginning to look like a steady upwards trajectory.

After two straight months of increases the export benchmark fell by 2% (although it remains 6.4% higher than year end 2018), while the import index dropped by 3.4%. It is now 3.2% down year-on-year.

The Obvious Breaks in Clouds

“Looking ahead it’s difficult to identify obvious breaks in the clouds,” Berglund added. “Geopolitics remain stubbornly unpredictable, with on-going uncertainty over US-China relations, while no one – not even the people at the very top – appear to have a clear view of what is happening regarding Brexit and its consequences.”

Stay Tuned and Up-to-date

“The only advice I can really offer stakeholders on both the supply and demand side is to stay tuned,” he said. “Keep right up to date with in-depth intelligence on rates and that will allow you to monitor the market, post your negotiations, and be prepared to adjust to and address the latest market situation with your supplier to ensure you get the best possible value for your business.”

Did you subscribe to our daily newsletter?

It’s Free! Click here to Subscribe!

Source: Logistics Middle East

LEAVE A REPLY

This site uses Akismet to reduce spam. Learn how your comment data is processed.