- The continued perfect storm of high demand, maxed-out capacity, port congestion, changing consumer habits, and general supply chain disruption is fuelling a rates explosion that, quite frankly, we’ve never seen the like of.
- Regional perspectives Xeneta’s XSI®, which is compiled from the very latest crowd-sourced ocean freight rate data from leading shippers, details significant gains across every single regional benchmark through November.
- In the US the picture was even more pronounced for imports, which rocketed by 39.3% in November (up 122.4% compared to the equivalent period of 2020), while exports climbed by a healthy 9% (26.2% up year-on-year).
Long-term contracted ocean freight rates soared by 16.3% in November, consolidating recent increases to put container shipping costs at 121.2% higher than a year ago as reported by Xeneta
The latest developments, revealed in the Xeneta Shipping Index (XSI®) Public Indices for the contract market, stand as the second-largest monthly rates rise on record, following a 28.1% jump in July this year, with all major shipping corridors experiencing significant growth. Leading carriers are, as a result, reaping breath-taking financial rewards.
One-sided contest
Patrik Berglund, CEO of Xeneta in Oslo, asks, “When will it end?” “Shippers who had hoped for some much-needed rate relief have been left punch-drunk by yet another round of exorbitant pricing increases. The continuous perfect storm of high demand, maxed-out capacity, port congestion, shifting consumer preferences, and general supply chain disruption is fueling a rate explosion we’ve never seen before. Furthermore, with the fundamentals heavily stacked in favour of the carrier community, it’s difficult to envisage a change of course in the near future. In fact, they’ve never had it so good, but many shippers, sadly, are on the verge of bankruptcy.”
Rich rewards
Carriers revealed a slew of jaw-dropping data in November as a shocking example of the current reality. CMA CGM, a French conglomerate, reported a net profit of USD 5.6 billion in the third quarter, with consolidated revenue up 89% year over year. In the meantime, Cosco Shipping Holdings’ net profit climbed by 1651% in the first nine months of 2021, owing to greater volumes and freight prices. The company’s revenue increased by 117.5% to USD 33.24 billion.
With a threefold increase in revenues year over year and an EBITDA of USD 2.08 billion, Israeli line Zim demonstrated its strength (against USD 262m in Q3 2020). A 174% increase in average revenue per TEU contributed to the improvement.
“The carriers are naturally positive,” says Berglund, “with contracts continuing to be obtained at high rates and no evidence of demand declining.” “Many have announced, or are well underway with, fleet growth programmes and plans for new routes, so it’ll be interesting to watch how this affects a complicated rate picture.” Market intelligence, such as that offered by the XSI®, can assist stakeholders in staying on top of trends and securing value in difficult discussions. Right now, that understanding is absolutely essential.”
Regional perspectives
Through November, Xeneta’s XSI®, which is based on the most recent crowd-sourced ocean freight rate data from top shippers, shows strong growth across every regional benchmark. Imports increased by 9.1% in Europe, bringing the index to 143.3% year-on-year, while exports increased by 23.7%, the highest monthly increase on record (and 85% up against last November).
Both import and export benchmarks showed robust improvements in the Far East, with the former up 14.6% and the latter up 14.5% (year-on-year hikes of 65.5% and 163.3% respectively). Imports in the United States increased by 39.3% in November (up 122.4% compared to the same month in 2020), while exports increased by a solid 9%. (26.2% up year-on-year).
Keeping control
“2021 will be a year to remember for carriers and a year to forget for the shipper community if that’s possible,” Berglund says. “What lies ahead is unclear, but we can see that action is being taken to relieve congestion at major US ports – with the Federal Maritime Commission (FMC) announcing the formation of six supply chain innovation teams – while newbuilds, potential new players, and the growing trend of shippers chartering their own vessels may have an impact on the current, overburdened supply and logistics chains.”
“Only time will tell, but it’s tough to rule out more rate hikes in the coming months for the time being.” It’s unclear how big they’ll be… That’s why we advise everyone to use the most up-to-date information and intelligence to try to maintain some level of flexibility and control in this volatile market.”
Xeneta’s XSI® is based on the most recent crowd-sourced maritime freight pricing data from throughout the world. 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.
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Source: Xeneta
