The long-term ocean freight rates have registered a major decline again, with 50 per cent drop in key pricing benchmark across last three months, according to Xeneta, a leading ocean and air freight rate benchmarking and market analytics platform headquartered in Oslo, Norway.
The beleaguered carrier industry took another major hit in June, with the latest data from Xeneta’s Shipping Index (XSI) showing a decline of 9.4pc in global long-term shipping rates.
Close on the heels of a 27.5pc collapse last month and a 10.3pc fall in April, contracted rates have now shed 47.2pc of their value in the last three months alone, and 51.7pc over the course of 2023, it stated.
Xeneta’s real-time data, crowd-sourced from leading global shippers, shows falls in the prices of valid long-term contracts across all key trading corridors.
Even as the uniform declines have now pushed the XSI to a 23-month low, Xeneta chief executive Patrik Berglund says there is a little hope of a turnaround on the industry horizon.
“The fall from the peaks of last year have almost been as dramatic as the rates explosion which gave carriers such a profitable 2022. Those higher rates now appear to be a distant memory, while 2023 is becoming quite challenging,” stated Berglund.
“A fall of almost 50pc in contracted prices in just three months on the XSI is highly unusual,” he pointed out.
“Furthermore, with ongoing weak demand, continuing macroeconomic and geopolitical uncertainty, and a growing excess of capacity, it’s difficult to see how the industry can turn this current trend around – at least in the short-term,” he added.
According to him, Xeneta’s data demonstrates a case of ‘the bigger they are, the harder they fall’, with huge declines for the year to date on the main container corridors.
The Far East export benchmark, a key link in the global supply chain, has, steeply declined since December 2022, shedding 65.3pc of its value, stated Berglund.
Meanwhile, the US import sub-index is down 56.3pc for the year, with the European import benchmark declining 46.2pc. The opposing European export figure fared only slightly better, down 38.3pc, he added.
“If we sift through those headline figures and look at individual trades, we see some eye-catching reversals in fortune over the first six months of the year,” explained Berglund.
“For example, China to North Europe and Indian West Coast and Pakistan to North Europe are two trades that have racked up total declines of more than 70pc since the end of last year. Taiwan to the Mediterranean and Taiwan to North Europe have also plummeted from the heights of 2022, with falls of 65.5pc for 2023 to date,” he noted.
Xeneta’s in-depth analysis shows a decline in all import and export benchmark figures for all regions. In Europe, the import sub-index hit a 24-month low point, falling 9.4pc since May, while the export figure dropped for the third consecutive month, declining 5.1pc.
The XSI for Far East exports lost 13.9pc of its value in June and has now slumped by 69.5pc since its peak last year. The back-haul regional import trade has experienced a more muted decline, with a fall of 6.7pc in June and 35.4pc for the year to date.
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