Ocean carriers strive to secure a minimum of 50% of their business through annual contracts, typically negotiated at considerably higher rates than the unpredictable spot cargo. However, the margin between the two is diminishing.
Stormy Seas Ahead
According to an analysis by Xeneta, its long-term freight rate XSI index declined by 2.6% in October, and has fallen 62.2% in the past 12 months. However, the benchmarking firm has warned that the situation for shipping lines could “get worse before it gets better”.
“Significant changes 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,” said Xeneta market analyst Emily Stausbøll.
“I expect the storm to arrive in January, with an even more severe decline in the XSI than in 2023,” she added.
Glimmer of Hope
- Xeneta’s Emily Stausbøll predicts a challenging year for container lines in 2024, anticipating a more severe decline in the XSI in January.
- However, she offers a ray of hope, suggesting improvements by May.
- Short-term container rates continue to plummet, with the Freightos Baltic Global spot index dropping 7% in October to $1,095 per 40ft. October rates on the Asia-North Europe route remained low despite carrier efforts, signaling ongoing challenges for the industry.
Current Trends
The Loadstar reported an unsolicited offer from a Shenzhen-based forwarder for shipping from Ningbo or Shanghai to Antwerp, Hamburg, or Rotterdam on the Ever Genius. Rates are $600 per 20ft or $950 per 40ft. Asia-Mediterranean rates dropped 14% in October to $1,370 per 40ft, 4% below 2019 levels.
Transpacific rates were relatively stable, with Asia-US west coast up 15% from 2019, but east coast down 17%. Transatlantic rates from North Europe to the US east coast hit a low of $1,045 per 40ft, 48% below 2019 levels. CMA CGM plans FAK price hikes on transatlantic services due to “unsustainable levels.”
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Source: The Load Star
