The cost of locking in container shipments increased by 30.1 percent in May, the largest monthly increase in long-term contractual ocean freight rates ever, says an article published in Freight News.
Unprecedented hike
That’s according to Xeneta CEO Patrik Berglund who said the unprecedented hike, revealed in the latest Xeneta Shipping Index (XSI®) Public Indices for the contract market, meant that long-term rates were now 150.6% up year-on-year.
In 2022 alone costs have climbed by 55%.
Breathtaking gains
“This is a staggering development,” said Berglund.
“Just last month we were looking at an 11% rise and questioning how such continued gains were possible. Now we see a monthly increase of almost a third, blowing the previous XSI® records out of the water. The breathtaking gains reflect the sharp increase of the average of all valid long-term contracts as the older contracts with lower rates expire, and are replaced by the newer contracts with much higher rates.”
“It’s a worrying time to be a shipper…and halcyon days for the carrier community, even as the market has started showing signs of slowing down.”
Data crowdsourced
The XSI®, developed by Xeneta in Oslo, is based on real-time data gathered from prominent shippers and provides in-depth insights into key worldwide trades.
ABB, Electrolux, Continental, Unilever, Nestle, L’Oréal, Thyssenkrupp, Volvo Group, and John Deere are among the companies that participate in the benchmarking and market analytics platform.
Impressive figures
“It goes without saying that the main carriers are achieving astronomical results at the moment,” Berglund said. “Last month we saw deeply impressive figures from OOCL and Maersk, and now we have Zim posting a 113% year-on-year revenue jump, with an Ebitda of $2.5 billion. As a result, the management team has upgraded its full-year Ebitda to $7.8-8.2bn.”
“Shippers, on the other hand, are being bled dry, while the lockdowns in China, allied to blanked sailings from the carriers to protect softening spot rates, have, and may continue to, impact upon the supply chain. Not as much cargo as anticipated has been moved over the last couple of months and, with the peak season approaching, that could cause added disruption. That leaves shippers in a position where they’re paying through the nose for services that, to be diplomatic, may not always meet expectations. It’s a very challenging time at present.”
Regulatory investigations
Berglund described mid- to long-term forecasts as “almost impossible” due to the difficulties of anticipating events on a month-to-month basis.
Continuing regulatory investigations into carrier activities may have an influence on business fortunes (despite the fact that no evidence of collusion or unfair tactics has been discovered thus far), while China’s zero Covid policy may continue to crimp industrial and manufacturing output.
The exact course of events, not to mention the ongoing implications of geopolitical turmoil, casts a pall over those seeking the finest logistics solutions for long-term requirements.
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Source: Freight News
