- Xeneta container rates alert: long-term ocean freight rates now up over 90% year-on-year
- the year has seen a unique convergence of COVID-19 disruption, port congestion, strong demand, and maxed-out capacity that has stoked the flames of record-breaking rates
- shippers are trying new strategies to circumvent one-sided negotiations and retake a sense of control
- with major new build capacity injections still, some way off, a 7-8% growth in global container volume is anticipated
Xeneta’s Long-Term XSI® Public Indices revealed yet another monthly hike in long-term ocean freight rates, with global container prices climbing by 3.2%. The development follows a 2.2% increase in August and an unprecedented 28.1% jump in July, leaving rates now standing 91.5% up year-on-year says an article on Xinde Marine.
Record-breaking rates
“The global supply chain is under immense pressure and desperate shippers have no choice but to pay up to secure deliveries, or at least try to, ahead of key trading periods such as Christmas. It’s a crazy market out there” explains Xeneta CEO Patrik Berglund.
Strategic shifts
Shippers are trying new strategies to circumvent one-sided negotiations and retake a sense of control. The emergence of larger retailers chartering their own vessels to ensure both reliability in the supply chain and a degree of cost control. Partnership partnering with an as-yet-unnamed freight forwarder to take on its own ships.
Unsustainable success?
Xeneta says with major new build capacity injections are still some way off, while a 7-8% growth in global container volume is anticipated. With such a lop-sided playing field carriers are aiming to secure elevated rates by locking customers into more long-term contracts and hedge future revenue. Some leading players are even offering multi-year deals.
To freeze spot rate increases
Another change of approach is exemplified by CMA CGM’s bold, recent move to freeze spot rate increases from now through to February. However, with rates already so high there’ll no doubt be many shippers viewing this as ‘crumbs from the rich man’s table’… and let’s see if any freezes do take hold within the broader carrier community.
Regional perspectives
The latest XSI®, which is based on crowd-sourced real-time rates from leading shippers, delivers an in-depth regional breakdown of market fortunes for key trades – with fortunes being the operative word. In Europe imports on the XSI® rose by 3.9% in September, meaning the benchmark has appreciated 132.5% year-on-year.
Imports in the Far East
In the Far East imports fell for the first time since March, but only by 0.7%. This still leaves the index 49.8% up year-on-year. Exports continued to power along in the right direction, with rates showing a 5.1% increase, up 126.8% against September 2020. Meanwhile, in the US imports rose by just 0.6%, although strong recent growth leaves the benchmark 67.3% up year-on-year.
Stay informed, stay flexible
Port congestion remains high, especially in key hubs such as LA, Long Beach, New York, and Hamburg, and equipment is in short supply. Seen against strong pre-festive season demand, and stubbornly high spot rates, it’s difficult to see much relief on the horizon for shippers.
“As ever, we’d advise all parties to avail themselves of the latest market intelligence to help guide them in negotiations, while retaining a flexible strategic approach to take advantage of any opportunities that do emerge. It’s a tough market out there… and probably will be for some time to come.”
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Source: Xinde Marine
