Discover how to spot when a disruption will create market volatility and see firsthand how insight and market readiness strengthens supply chain resilience.
Houthis resuming attacks on shipping.
Flooding causing disruption at Dubai Airport.
MSC Aries seized by Iran Revolutionary Guards.
Industry events – whether geopolitical in nature, or just nature itself – continue to profoundly affect global commercial operations. This causes operational disruptions, higher production costs, reduced supply chain reliability, disrupted output, trade route blockages, and spikes in freight costs and event-specific surcharges.
And if you’re in the thick of procurement operations, this impacts every part of your job. From demand determination, schedule reliability and meeting customer expectations, to managing freight spend, CO2 targets and internal scrabbles to get goods into available containers ASAP – often outside the scope of long-term negotiated contracts, and on top of the usual tender season.
While no-one has a crystal ball, in April’s State of the Ocean Freight Market webinar, Peter Sand and Emily Stausbøll shared ways to spot when a disruption will create market volatility and what disruptions will likely hit shipping next. They also demoed insight and market readiness with a behind the scenes look at Xeneta Monitor 2.0 – the only market analytics platform in the world that provides you with a 360 view of the ocean freight market.
Watch on-demand here, or keep reading for some key takeaways:
The next disruption: Not ‘if’, but ‘what and when’?
If you’re a shipper with a global network and are keen to manage supply chain risk, Stausbøll suggests watching these three areas closely:
- The US – with presidential elections coming up in November and Donald Trump already floating the idea of 60% tariffs on imports from China, 10% tariffs on imports from anywhere else, we might see some shippers starting to frontload their imports of goods to ensure delivery before tariff deadlines, which would have a knock on impact to rates and capacity on the US bound trades.
- China and Taiwan – there are very real possibilities of tensions rising in this area, and if they do, shippers should be prepared for the knock-on effect to exports within the region – with intra Far East volumes already very high, but also exports out of the region too, and the ripple effect on global supply chains more generally.
- Nearshoring – with more volumes moving away from China towards South East Asia (including the Indian sub-continent, Mexico and closer to Europe), there is the potential for disruptions whilst the infrastructure needed to support nearshoring or reshoring activity is built. Once established, we should expect to see a ramping up of capacity and production through these corridors.
You’ll have to watch the webinar to see what else is on the horizon...
Primary challenges of shippers and freight forwarders in 2024
We asked. Your peers answered.
During the State of the Ocean Freight Market webinar, Xeneta conducted a poll on the primary challenges of shippers and freight forwarders in 2024. This question mirrored a poll taken during April’s customer pulse webinar with Xeneta CEO Patrik Berglund and Michael Braun, VP of Customer Success & Solutions.
While Xeneta originally predicted that de-risking supply chains would feature as the primary concern, results showed that managing freight spend was a clear challenge for all shippers and freight forwarders in 2024.
Hosts Sand and Stausbøll were unsurprised, with Sand commenting: “in essence isn’t that what it’s all about. It’s the one thing that is the mother of all that has to do with maritime supply chains and logistics – freight spend and the disruption that may or may not come about”.
Growth in TEU-miles
As with any kind of mode of transport, if you’re trying to understand how much demand there is for container ships, it’s not enough just to look at how many containers need to be moved, but also how far they have to move on average.
The average distance moved by a container globally is up by around 11% from where we were in 2023. This has been driven by ocean freight diversions because of the Red Sea crisis and is translating to higher costs, longer transit routes and great impacts to CO2 emissions.
As Stausbøll observes, despite a 23% growth in TEU-mile with these diversions, “if you compare that with how the fleet has been growing, even with this higher TEU mile growth, the fleet is able to manage that. We’re going to keep getting new ships being delivered, and at some stage that TEU mile demand will revert back to what it should have been if ships weren’t diverting .
It’s when you’re looking at this that you understand why carriers are not pushing too hard when it comes to the long-term market”.
More on the China-US trade…
Many US shippers see their new one-year contracts entering validity this month. This has seen the China Main to US West Coast trade corridor garnering a lot of additional attention – mostly by shippers and freight forwarders looking to see what level of negotiations peers landed on.
As Emily Stausbøll notes, shippers who are contracting 12months at a time are seeing contracts coming in slightly below where they were this time last year (April 2023), even if they are slightly higher than what Xeneta’s long-term rates show on April 30th 2024.
In part, this ‘kindness’ from carriers comes from an awareness that there is currently an over-capacity in the market. Absolving some of that capacity is the continuation of new container ships being delivered, but at some stage carriers will make a more large-scale return to the Red Sea and over capacity will once again be a dominating issue.
Whilst Xeneta suspects that long-term contracts signed in May 2024 will be higher than the average of long-term contracts signed in the last 3 months, they should still be discounted from where they were this time last year.
Middle East Unrest
Another topic touched upon in the State of the Ocean Market April webinar was the impact of political unrest in the Middle East on ocean freight. In particular, Peter Sand looked to the Far East Main to North Europe Main trade lane to analyse the effects of the Red Sea crisis on the long- and short-term markets.
As with any industry event, when a handful of players in the market know a lot and the majority of players only know a little, “that kind of uncertainty always delivers a very very spiky spot market”. The reason the spikiness if often short-lived is because “once that asymmetric market information evaporates, you see the spot market coming down – at first at faster rates, more recently, at slower rates.”
The lesson here is to be the person in the know. More than that, it’s to seek out data that gives greater transparency to the shipping industry as a whole, so knowledge is less asymmetrical to start with. This starts with monitoring market movements in real-time, and trusting 450Million+ contracted data points to show you a true picture of ocean freight.
For instance, we shouldn’t be surprised to see carriers successfully pushing for GRI implementation in early May, because we’ve seen this behavior in every black swan event to date. The thing to monitor is whether these implementations stick or slip.
Far East Main to South America East Coast Main
The Far East Main to South America East Coast Main corridor is an example of a prominent trade lane that’s showing big swings in freight rates due to capacity being added and removed in response to the Red Sea crisis. The volatility of the spot market demonstrates an effort to keep this trade attractive to carriers – with spot-market rates reaching the highest we’ve seen in almost two years.
Sand added that “it’s not only a matter of short-term and long-term contracts, it’s also a matter of reliability, carbon emissions and matching capacity from the carrier's perspective into the market; and for you as shippers and freight forwarders to know more about the underlying dynamics when capacity is too high or too low.”
Looking for more insights?
Interested in understanding how real-time market data can enhance your supply chain? We're here to help you uncover opportunities and navigate risks with insights tailored to your specific trade lanes. Book a demo and see how we can support your goals.
For more insights straight into your inbox, sign up to the Xeneta newsletter here.
