In this exclusive Q&A, Xeneta CEO Patrik Berglund reflects on the challenges and milestones that shaped Xeneta, offers sharp insights into today’s volatile market, and reveals his bold vision for the future of how ocean freight will be bought and sold.
Read on for the full interview...
Is it possible to sum up how the market has changed in the past decade?
When we started building Xeneta 13 years ago, we identified three key challenges when it comes to buying and selling ocean freight – volatility, opaqueness, and inefficient processes.
We saw the volatility and the massive spread in rates being paid by companies to get their cargo moving. We also saw how the sellers of ocean freight were benefiting from this opaqueness and confusion.
This volatility and opaqueness resulted in inefficient processes as shippers tried to discover what price they should be paying. You run an RFQ, you speak on the phone, you send emails, you have in person meetings just to come up with a price you hopefully can ship on for the coming period.
We couldn’t have envisioned the extreme market volatility over the past five years or so with Covid-19 and the Red Sea conflict, but these fundamental market challenges are as true today as they were when we first had the vision to start Xeneta.
It doesn’t matter whether the market is spiralling upwards or collapsing back down, these inefficiencies exist so you need data and intelligence to retain your competitive edge and manage supply chain risk.
How can you drive visibility if suppliers benefit from opaqueness?
I gave a presentation in 2016 about the evolution of this industry, where the top five carriers went from 25% market share to more than 70% over the previous three decades.
If you look at the last 30 years, it's almost inevitable that at some point you end up with such a small consolidated market that the carriers control it. Carriers have learned that, when the market shifts, they don’t need to jack up the prices USD 100, they can go to USD 5 000 if they want to because there is no alternative and shippers are still forced to buy.
If the selling side doesn't intuitively want to provide visibility, you must go on a long journey to accumulate pricing data from buyers. Bringing together the demand side encourages the supply side to follow, which is ultimately what we saw happen.
It took us several years to get to 15 million rates in the Xeneta platform – now we’re adding that many new rates every single month with almost 600 million datapoints in the platform. When you reach that level of maturity, you have both buyers and sellers in the platform and a rich, neutral dataset that accurately reflects the market.
Only then can you achieve a level of visibility that allows the market to move into even more sophisticated ways of buying and selling freight.
What is the next stage?
The inefficiencies caused by market volatility and opaqueness have become even more mind-boggling and people simply can’t stomach it anymore, which is why we’re seeing a huge increase in index-linked contracts.
Shippers spend between three and seven months on an RFQ to finally agree a price for the next 12 months. Then rates spike (over 600% during covid-19 as an example) and the contract you've just spent the best part of a year negotiating gets ripped up. The same happened at the start of 2024 when the Red Sea crisis caused rates to spike over 400%.
I truly understand that finance departments want to agree a budget for freight spend for the next 12 months, so shippers try to lock in a long-term rate. But this is non-sensical when you are unlikely to be able to ship at that rate for the duration of the contract. Seriously, what is the point?
Index-linked contracts track the market against rules agreed between the buyer and seller, meaning there is no need for constant manual renegotiations. When you look at it this way, we have been living in an indexed-world since 2019. This is because buyers and sellers have needed to constantly renegotiate contracts following the market spikes and falls.
Xeneta is beautifully placed to support index-linked contracts because we are recognized on both the buyer and seller side as having a dataset that accurately reflects the market.
2025 will be the year we bring clarity to this industry as to how indexing should be done.
What I really love about Xeneta is that as we connect more and more companies to our platform, the data keeps growing and it allows us to push out more functionality, more software, and more valuable intelligence.
What about in the longer term? How do you think freight will be bought and sold in a few years from now?
Things are moving very fast with indexing, and I believe the natural next step is derivative contracts where freight can be bought and sold as futures on the stock exchange.
If you think about this industry, the only way to really achieve budget clarity for the coming period is through futures – where you lock in the price for the next 12 months, and there is no opportunity to not deliver according to the agreed terms because the banks would hold the carrier and shipper accountable.
Again, Xeneta is uniquely positioned to help the market make this transition.
We have the trust of the buyers who desperately want budget predictability, but we also have the trust of the sellers who can secure cash flow that helps them to justify investing billions of dollars in assets such as new vessels. A financial solution of this type is in the interest of both sides of the table, which is why I feel it’s inevitable.
Looking at the market more generally, how do you see 2025 and what risks are shippers facing?
History has shown us that, more or less, every year brings surprises, so I would anticipate surprises in 2025 as well.
Trump’s tariffs are taking headlines but the most important thing this year is the Red Sea situation. If we see a large-scale return of ships to the region then rates could collapse, but there are a number of stages carriers must go through before we reach that point.
It is not a simple process and carriers will move carefully. If a carrier is discussing this with their insurance company, is the promise of a terrorist group to not attack their ship sufficient to go back?
This uncertainty makes things very difficult for shippers who are worried about locking into higher long-term rates if the market is going to collapse.
You can begin to see why so many shippers are now moving more volumes against index-linked contracts.
I personally join calls with Xeneta customers every week and see all shapes and forms of index-linked contracts, but the one common denominator is that everyone is looking to approach buying and selling freight differently.
It is this appetite across the industry for new ways of buying and selling freight that makes me so confident and excited about the future of Xeneta, because we have the data, intelligence, and energy to make it happen. And I would encourage anyone interested to reach out and see Xeneta for themselves.
