‘Torrid times for carriers’

Real-time data from the Xeneta Shipping Index show contracted rates fell 7.8% in August, meaning prices have now dropped 62.7% since this time last year.

The world’s busiest routes – exports from the Far East – have endured the most dramatic declines, with Xeneta’s regional sub-index showing a 75% year-on-year fall in the value of valid contracts.

“It’s a torrid time for carriers in the contract market,” said Peter Sand, chief analyst at Oslo-based Xeneta, “with continuing weak demand exacerbated by burgeoning overcapacity as more and more new ships come online.

“This is driving down the industry’s prized long-term rates. However, the industry needs to bear in mind developments in the spot market. Here carriers have managed to lift the rates on the major trades in the past couple of months.

“Regardless of the big plunge here – which shippers should benefit from – the falling rates may not last.”

If this is the case, it will be a welcome development for carriers, says Sand, who points to continued falling rates since this time last year, with the smallest decline being 0.1% in December 2022 while May 2023 saw a collapse of 27.5%.

In Europe, the import sub-index fell 3.4% for the month and is now down 60.1% year-on-year. Exports fared slightly better, with a dip of 2.8% from July (down 52.4% since August 2022), despite a significant drop of 13.6% in contracted prices on the export trade from North Europe to China, which has now collapsed 85.4% year-on-year.

The US Import XSI recorded this month’s largest fall, sinking by 14.9% to leave it 65.2% down year-on-year. The biggest monthly rates drops were seen out of China, Japan, Taiwan, and Korea – to both US West and East coasts – with price falls ranging from 19.3% to 62.3%. The XSI for US exports was this month’s most resilient figure, losing just 0.8% of its value.

Xeneta’s data continues to paint a bleak picture for Far East contracted export rates, with the sub-index registering a 14.2% monthly decline for August. The region’s import XSI fared better, with a decline of 2%, now down 51.1% year-on-year.