A turning point for the ocean freight industry?

According to data from market analyst, Xeneta, September saw an increase of 0.2% in global long-term contracted rates, halting a year-long decline wiping 62.2% off market prices since August 2022.

“It’s too early to say if this is a fundamental, lasting shift,” warned Peter Sand, chief analyst, Xeneta. “But, despite the very small scale of the gain, it’s a significant development after such a prolonged period of decline.

Sand says that the reasons for the shift are complex but points to a restriction in capacity on the largest trades coupled with small improvements in demand.

“In recent weeks and months, we’ve already seen spot rates move above long-term rates on key corridors, suggesting that long-term rates would eventually follow suit and start climbing,” he continued.

“It’s still very difficult to predict this dynamic market, especially given the rampant overcapacity, but – if carriers can continue their united, proactive capacity management – this first increase probably won’t be the last.”

In Europe, the sub-index for European imports showed a 1.8% increase from August (59.3% down year-on-year), with the export figure heading in the opposite direction and falling 2.2% for the month, reaching its lowest level since October 2021.

Meanwhile in the Far East, 13 consecutive months of falls have been halted by a gain in September of 1.4%. However, as with Europe the backhaul sub-index recorded a comparable loss, falling 1.5% to its lowest level since January 2021.

In the US both the import and export benchmarks fell, the former by 2.3% and the latter by 0.9%. These have now seen respective year-on-year declines of 65.6% and 11.9%.

“Given the current developments there’s a strong imperative for all parties entering contract negotiations to keep a close eye on real-time data,” Sand concluded.

“Timing is everything when securing the best deals in a market on the move. If decisions are delayed and rates growth gathers momentum there’ll be a clear price to pay over the duration of these new contracts.”