Ocean freight container shipping spot rates have increased dramatically in recent months, but the long term market has been insulated from this volatility in comparison – perhaps until now.
The Global XSI®, which covers all valid long term contracts in the market, reached 151.5 points in July. While this is still 4.0% lower than December last year, it represents a month-on-month increase of 2.5% from June.
More notably, the underlying XSI® sub-index for Far East Exports – which includes the world’s biggest fronthaul trades to Europe and the US - increased 12.6% in July to 178.8 points.
This coincides with short term rates on major trades from the Far East to the US and Europe beginning to soften in July from the massive increases seen over recent months.
Emily Stausbøll, Xeneta Senior Shipping Analyst, said: “Long term ocean container shipping rates remained subdued despite massive increases on the short term market in May and June – but that is starting to change.”
With long term rates on major fronthaul trades now starting to increase while short term rates are softening, this narrowing in the short-long market spread raises a key question – how high will long term rates rise before growth is stunted by declines in the short term market?
Stausbøll said: “This is a pivotal time for the market. Shippers will be hoping the spot market crashes back down hard and fast, while carriers will be doing everything possible to keep short term rates elevated for as long as possible.”
Long term shipping rates on the major fronthauls from the Far East to Europe and the US may now be showing signs of upward pressure, but the backhaul trades remain subdued in July.
XSI® data highlights:
Global
Global XSI® rose by 2.5% from June, bringing it to 151.5 points. This is still 4.0% lower than in December 2023, highlighting the disconnect between the XSI®, which covers the average of all valid long term contracts, and the spot market.
Far East Export
The Far East Export sub-index increased by 12.6% in July to 178.8 points. While this is significant given the importance of the major fronthaul trades involved, developments on the long term market are still a long way from matching the massive spike in spot rates.
Far East Imports
The sub-index for Far East imports fell to 94.1 points in July. This is 15.7% lower than June and the lowest this sub-index has been since Q1 2020.
US Imports
The XSI® for US imports rose for the second month in a row in July, this time growing by 6.4% from June to bring the index to 161.3 points. July’s figure is down 30.4% from the same time last year – but up 9.0% from May 2024 when the sub-index bottomed out at 147.9 points.
US Exports
US Exports sub-index fell by 10.2% in July, which is the biggest month-on-month drop since April 2023. It now stands at 108.8 points, and its lowest level since October 2021.
Europe Imports
Sub-index for European Imports rose to 167.5 points in July. This marks a 2.7% increase following two months of declines. This leaves the index down 9.6% from July 2023.
European Exports
The sub-index for European Exports fell 4.8% in July, making it five consecutive months of decline. This sub-index now stands at 114.6 points, which is the lowest it has been since January 2021.
You can download your free copy of the full XSI report here.
For more insight from Emily Stausbøll, read our latest press release here.
