Global long-term shipping rates sank to a two-year low in July, with the latest data from Xeneta’s Shipping Index (XSI) showing a fall of 9.5 per cent since June.
This adds to a deep collapse that started last year.
Long-term valid contract rates have now lost 57.8 per cent of their value since the same period in 2022.
Xeneta’s real-time data, crowd-sourced from leading global shippers, makes bleak viewing for carriers with rates falling on all the main trading corridors.
Xeneta Market Analyst, Emily Stausbøll, pointed out that market indications also show there will be little respite on the horizon for carriers.
“Carriers waiting for higher volumes in July, and in the coming months due to peak season, look increasingly likely to be disappointed,” said Stausbøll.
“Even if volumes do increase, and whatever happens to demand, overcapacity is now inevitable as these record numbers of new ships being delivered this year will have a wide-reaching effect.”
According to Xeneta, the figures show an alarming situation unfolding for carriers as June saw the highest ever monthly deliveries of new ships, with more than 300,000 TEU of capacity from a total of 40 new ships added to the market.
In the first six months of the year, a total of 990,000 TEU was delivered, with around the same to come in the second half of 2023.
Low demand is still the underlying factor affecting rates and the figures for July were gloomy across the board as reported by Xeneta.
The XSIfor Far East exports fell by just 2.7 per cent to 188.62 in July, but this is now the lowest this index has been since April 2021, and a 69.5 per cent drop from July last year.
European imports were down by 12 per cent from the previous month and this sub-index is now down by 52.7 per cent since the start of this year.
A slight fall of 2.9 per cent in the XSI for US imports has brought the index to 231.6 points in July as per Xeneta’s data.
“This is the only index still above 200, or still more than twice as expensive as the average rate in January 2017,” explained Stausbøll.
“On all but three of the XSI sub-indices, the averages of all valid long-term rates have dropped by more than 50 per cent compared to a year ago.”
“The average shipper on the main trades should be paying less than half the rates they were a year ago on the long-term market. Despite an increase in volumes from previous months, global container demand remains down year on year.”
Moreover, speaking on the recent dispute at Canada’s West Coast ports between dockworkers and their employers’ association who have just reached a tentative resolution, Stausbøll said: “Low import volumes and space at some ports allowed shippers and carriers to mitigate delays and find alternatives when the Canadian ports were temporarily closed, but this situation is yet another thorn in the side for the industry at a crucial time leading up to peak season.”
This report for Xeneta comes after they announced that the carrier industry took 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.