The ongoing trend of downward pressure on long-term contracted ocean freight rates appears to have been broken, or at least temporarily derailed, with marginal increases seen across the board in November. According to the latest XSIĀ® Public Indices report from Xeneta, which provides unique business intelligence based on real-time crowd-sourced data from the worldās leading shippers, global rates climbed by 0.9% over the last month. This disrupts a long-term pattern of decline that, with the exception of a sizable and unexpected rise in May, has been ongoing since Summer 2018.
Oslo-based Xenetaās XSIĀ® Public Indices report utilises over 110 million data points, covering over 160,000 port-to-port pairings, to provide unparalleled insight into the very latest market moves. In November, those moves were, according to Xeneta CEO Patrik Berglund, surprisingly positive for the somewhat beleaguered container industry.
Back to black
āWeāve gotten so used to seeing the arrow pointing downwards over the course of the last year and a half or so that a push āinto the blackā comes as a minor shock to the system,ā he says. āIt just goes to show how unpredictable the ocean freight segment remains. With that in mind, it is vital, for all parties in the chain, to stay abreast of the latest intelligence to stand any chance of getting optimal value from contract negotiations.ā
Although the index remains 4.0% lower than the high of 116.19 reported in May (currently standing at 111.54 points) it is now up 0.8% year-on-year, and has increased by 3.0% since the end of 2018. And itās not just the index thatās āin the blackā.
āThe carriers have posted largely positive results for Q3,ā Berglund explains, āwith the German line Hapag-Lloyd reporting a net profit of $168m ā thatās against a profit of just $15m this time last year. Meanwhile, the worldās largest carrier, Maersk, reported a very healthy net profit of $520m. Even Yang Mingās loss of NTD 1.38bn is not as bad as it seems on the surface, as if options had been exercised on previously chartered vessels they too would be in the black. So, the latest news is not as bad as many will have feared.ā
Regional insights
This is reflected in the XSIĀ® regional import and export breakdowns, which all registered moves in the right direction. The import and export benchmarks for Europe climbed by 0.2% and 0.6% respectively, while shipowners will have been further buoyed by a draft paper from the European Commission suggesting the EU Consortia Block Exemption Regulation (BER) will be extended until 25 April 2024 (this allows carriers to participate in alliances with a market share of up to 30% on EU trades).
In the Far East the XSIĀ® import index showed a 1.2% increase (although it remains down 16.5% year-on-year) with exports rising by 0.5%. US imports climbed by 1.4%, boosting a trend that has driven a 27.3% increase since April this year, with exports registering a 1.5% rise.
Plot twists ahead?
Although all the key indicators are moving upwards Berglund warns that, as ever in the unpredictable ocean freight sector, nothing can be taken for granted.
āWorld trade, and this segment is at the vanguard of that, still faces uncertainty on a number of fronts, and that obviously impacts upon the demand-rates dynamic,ā he comments. āFor example, thereās been no noticeable trade negotiation developments between the US and China and Iām not sure anyone really knows whatās in store next. Reports suggest that the tit-for-tat āwarā theyāve become embroiled in will contribute to the first full-year decline in volumes on the Eastbound transpacific trade since the depths of the global financial crisis in 2009. The carriers are feeling that pain.
āFurthermore, thereās ongoing wider economic and geopolitical concerns, mixing with serious single issues such as Brexit ā with the next season of this ongoing drama due to hit our screens after the UK general election in December. When we add in the carriersā attempts to formulate strategies to claw back the additional cost of low Sulphur fuels to comply with IMO 2020, well⦠further uncertainty reigns.ā
Knowledge is power
Berglund concludes: āAlthough the sector is always changing, our message stays the same ā keep up to date with the very latest market intelligence to get maximum value for you and your stakeholders. As Novemberās developments illustrate, thereās no such thing as business as usual in the ocean freight segment.ā
Xenetaās XSIĀ® Public Indices is based on crowd-sourced rates data from leading global shippers. Companies participating in the platform include names such as Electrolux, Continental, Unilever, Lenovo, Nestle, LāOrĆ©al, and Thyssenkrupp, amongst others.
About Xeneta
Xeneta is the leading ocean freight rate benchmarking and market intelligence platform transforming the shipping and logistics industry. Xenetaās powerful reporting and analytics platform provides liner-shipping stakeholders the data they need to understand current and historical market behaviour ā reporting live on market average and low/high movements for both short and long-term contracts. Xenetaās data is comprised of over 110 million contracted container rates and covers over 160,000 global trade routes. Xeneta is a privately held company with headquarters in Oslo, Norway and regional offices in New York and Hamburg.