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Are you about to sign a long-term container shipping contract? Don't miss out on this crucial information that could save you from potential risks. Watch the recent webinar featuring experts from Xeneta, Peter Sand and Emily Stausbøll, as they discuss key trades and guide shippers on contract timing decisions.
Far East – US West and East Coast Trades
Key takeaways:
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Spot Rate Trends: Over a recent three-month period, there was a notable increase in spot rates by approximately 60%. While these rates might not seem striking when juxtaposed against the peaks from the prior year, they stand out significantly when contrasted with 2019 metrics.
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Long-term Rate Developments: While the immediate spike in spot rates hasn't drastically influenced long-term rates yet, a granular examination of the data reveals that contracts inked in August are marginally pricier than those finalized in July, indicating an upward trajectory.
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Financial Implications: The existing disparity in the spot market rates, specifically a spread of USD700 (trans-Pacific), has substantial economic repercussions. For instance, a consignment of 1000 boxes might incur an additional expenditure of a million dollars, emphasizing the importance of aptly timed contract negotiations.
Far East – North Europe Trade
Key Takeaways:
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Spot Rate Fluctuations: Spot rates for North Europe faced a decline even after the new General Rate Increase (GRI) was implemented, hinting at underlying market fundamentals.
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Volume Trends: U.S. volumes witnessed an uptick, contrasting with North Europe's steadier and more flat volume trends.
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Carrier Challenges: A lack of unified communication among carriers in Europe has been observed, especially as spot rates have dropped before certain GRIs.
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Carrier Concerns for North Europe: The rapid fall in spot rates for North Europe might be more alarming for carriers than the U.S. rates, given the early long-term contracting typical in Europe.
When to Time Signing Long-Term Contracts
During the Webinar, a helpful slide with color indicators was shared to guide shippers on the ideal timing for signing contracts for a few of the key trades. Green indicates favorable conditions, while red suggests unfavorable timing.
From a bird’s eye view, notable fluctuations in rates, such as a +55% increase in spot rates on the Far East - US West Coast, indicate that now could be an ideal time to negotiate before the rates affect long-term contracts. For the trans-Atlantic trade, it is recommended to be patient.
When it comes to making decisions, it's essential to consider different strategies. Cherry-picking certain trades or opting for longer-term contracts in specific lanes can provide peace of mind. Remember, understanding the numbers behind the data is crucial. Our experts dived into the key data points to consider.
The information shared in the Webinar serves as a valuable starting point for considering the timing of your next ocean freight procurement round.
Watch the full 30-minute Webinar to explore the comprehensive "Timing of Long-Term Contracts" slide and gain in-depth insights from our experts. Get insights to help you effectively manage the upcoming freight tendering and transportation budgeting season.
