Xeneta analysis reveals 50 per cent drop in container rates in 2023

Xeneta analysis reveals 50 per cent drop in container rates

The carrier industry has taken another major hit in June, with the latest data from Xeneta’s Shipping Index (XSI) showing a decline of 9.4 per cent in global long-term shipping rates.

Following on the heels of a 27.5 per cent collapse in May, and a 10.3 per cent fall in April, contracted rates have now shed 47.2 per cent of their value in the last three months alone, and 51.7 per cent over the course of 2023.

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.

READ: Skyrocketing freight rates could head back to normality by 2024

The uniform declines have now pushed the XSI to a 23-month low, with little hope of a turnaround on the industry horizon according to Xeneta CEO Patrik Berglund.

Berglund stated: “The fall from the peaks of last year has 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. A fall of almost 50 per cent in contracted prices in just three months on the XSI is highly unusual.

“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,” Berglund added.

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 65.3 per cent of its value.

Meanwhile, the US import sub-index is down 56.3 per cent for the year, with the European import benchmark declining 46.2 per cent.

The opposing European export figure fared only slightly better, down 38.3 per cent.

READ: Port of Valencia sees 12.5 per cent drop in export freight rates

“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,” Berglund noted.

“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 70 per cent 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 65.5 per cent for 2023 to date.

“There really are very few bright spots with the only exception this month being the trade lane from South America East Coast to China, which is up by 11 per cent month-on-month,” said Berglund.

READ: Container market ‘sitting pretty’ as freight rates continue climb

Xeneta’s 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 9.4 per cent since May, while the export figure dropped for the third consecutive month, declining 5.1 per cent.

The XSI for Far East exports lost 13.9 per cent of its value in June and has now slumped by 69.5 per cent since its peak last year.

The back-haul regional import trade has experienced a more muted decline, with a fall of 6.7 per cent in June and 35.4 per cent for the year to date.

The story continues on the US sub-indexes, with an 11 per cent drop on the import benchmark pushing it to an 18-month low. The export back-haul figure recorded a 4.3 per cent fall.

These findings are consistent with the study DP World released late last year where it predicted that Inflation, fluctuating freight rates, and geopolitical tensions are to dominate concerns for the global supply chain over the next five years.

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