Bull, bear, buyer? As 2022 comes to an end, similarly turbulent to the two years preceding, the ocean freight market is finally showing signs of stability.
With the year starting at an absolute peak, Xeneta sourced data is trending towards a stable, buyers' market. In comparison to past highly elevated-levels and from previous seller domain – the data is revealing a hopeful light at the end of the tunnel for buyers (on some trade lanes, that is).
The customer-exclusive December Freight Market Pulse Webinar, hosted by Xeneta CEO and Co-Founder Patrik Berglund and Michael Braun, VP, Customer Solutions, covered the year in review and customer sentiment ahead of the upcoming tender season.
In unanimous consensus, 0% of Xeneta customers said they would be staying with their current long-term contracts, stating an emboldening time for buyers in the freight market. The segment highlighted trades showing clear recent downward-trends and named the following as “ones to watch” - Asia – US, Asia – EU, EU – US.
Key Highlights | Xeneta Customers Say
- 0% of customers are staying with their current long-term contracts
- 55% of customers are pushing through with a scheduled RFQ to get new rates
- 31% of customers are now negotiating upcoming contracts in 2023 for one year, as usual
- 46% of customers are considering sustainability in their procurement strategies for 2023 on an informative basis
Within 2022 there was a shift in pricing and therefore, advantages previously offered by long-term contracts.
When asked about their current contract situation:
- 0% of customers are staying with their current long-term contracts
- 6% of customers stated that none of the above described their situation
- 12% of customers are trying to move volume to the short-term market
- 27% of customers renegotiating existing long-term contracts or planning to within Q1
- 55% of customers are pushing through with a scheduled RFQ to get new rates
While most customers polled are choosing to push through with a scheduled RFQ, the customer feedback clearly expressed all customers are continuing to stay agile in the changing market to optimize their value – breaking out of long-term contracts, pushing through with scheduled RFQ’s for new rates, and re-negotiating previously agreed long-term contracts. Indicating a potential turning of the tables on some trade lanes – from a seller’s market to a buyer’s market.
Expanding on the first question, customers were then asked for what length they’re now negotiating for upcoming contracts. The answers were telling:
- 14% of customers said they’re currently using only the spot market to negotiate upcoming contracts
- 14% of customers said they’re negotiating for 3-6 months to incorporate the downward trend
- 21% of customers said they would negotiate for 3-6 months as usual
- 21% of customers said they would negotiate for one year, with index-based adjustments on a quarterly basis
- 31% of customers said they would negotiate for one year, as usual
With the majority of Xeneta customers continuing to negotiate for one year, as usual - Michael and Patrik emphasized the pressure the other respondents are putting on sellers, with a portion negotiating now for only 3-6 months, or for up to one year but with index-based adjustments. The customer consensus reveals that shippers are still trying to materialize savings as soon as possible and are now having more influence to do so.
With the launch of our latest Index, the Carbon Emissions Index – customers were polled on their interest to incorporate sustainability in their procurement process for the coming year. The results were telling:
- 7% of customers said they weren’t planning to incorporate sustainability in their procurement process at all
- 14% of customers are planning to include sustainability in their procurement in 2023
- 32% of customers are planning to incorporate sustainability in their procurement process with a clearly defined impact on the selection process
- 46% of customers are planning to incorporate sustainability in their procurement process exclusively on an informative basis
With the leading percentage of 46% of customers planning to incorporate sustainability into their procurement process, the (CEI) index and its offerings have been well embraced by Xeneta’s community of customers. Sustainability has been a buzzword for the past few years (arguably more) and the shipping industry, though late to the game – has shown its interest in improvement. The statistics however, beg the question – will intention translate into impact?
Want to learn more?
Xeneta customers get access to monthly market commentary during the Ocean Freight Market Pulse Webinars. Learn more about the Xeneta platform and how to become a customer now.
