The latest Xeneta Shipping Index for February 2024 has seen the most significant month-on-month rise in 18 months, signaling a pivotal moment as US shippers and ocean freight carriers gear up for contract negotiations, says an article published on xeneta website.
Summary
- Xeneta Shipping Index (XSI) for February 2024 records significant month-on-month surge, marking second increase in 18 months
- Surge attributed to incorporation of Red Sea diversion surcharges into existing long-term contracts, especially on Asia-Europe trades
- US shippers and ocean freight carriers gearing up for contract negotiations, with TPM24 in California serving as starting point
- Carriers may leverage XSI surge and 180% spot market surge on Transpacific trade to justify rate increases
- US shippers may reference relatively flat XSI sub-index for US imports and softening spot market to negotiate lower rates
Global XSI Surge
The Global XSI®, which aggregates Xeneta’s crowdsourced data to gauge the average of all long-term contracts in the ocean freight shipping market, surged by 4.3% in February, reaching 154.4 points. This marks only the second increase in the past year-and-a-half, largely attributed to surcharges related to Red Sea diversions being incorporated into existing long-term contracts, especially on trades between Asia and Europe.
Crucial Period For US Negotiations
As negotiations loom, TPM24 in California next week will serve as a starting point for discussions between US importers and carriers. Carriers may leverage the substantial rise in the Global XSI® and a remarkable 180% surge in the spot market on the Transpacific trade since mid-December to justify rate increases in new agreements.
Conversely, US shippers may reference the relatively flat XSI® sub-index for US imports, which dipped 3.3% to 176.1 points in February, along with a softening spot market, as grounds for negotiating contracts at lower rates.
Europe’s Turnaround
In Europe, the index for imports experienced a notable 8.6% rise in February, a stark reversal from the 18.4% decline recorded in January, now standing at 156.2 points, 63.1% lower than the previous year. Meanwhile, European exports saw a modest 1.3% increase to 165.1 points.
Far East Dynamics
Far East exports reflected a substantial 13.0% uptick from January, reaching 152.9 points, marking the second consecutive month-on-month increase in the past 18 months. Import-wise, Far East imports led the XSI® surge in February, growing by 13.5% to 112.8 points.
Michael Braun, Xeneta VP of Customer Success & Solutions, highlighted the challenge ahead of negotiations, as both carriers and shippers maintain strong positions, albeit with significant disparities in their rate expectations.
As the industry navigates through this critical period, the outcomes of these negotiations will profoundly impact the trajectory of ocean freight shipping rates and trade dynamics in the coming months.
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Source: xeneta
