What about the long term market?
That has been a common question put to Xeneta by customers in response to increasing spot rates during the Red Sea crisis.
Let us tell you…
The latest XSI® figures show the average of all valid long term contracts fell by 6.2% in January. At 148.0 points this is the lowest the XSI® has been since April 2021.
The XSI® is the average of all long term rates in the market, therefore the index drop in January is more likely caused by the expiry of contracts signed back in Q4 2022 at higher rates rather than shippers putting pen to paper on agreements at lower rates in the past month.
Shippers may be reluctant to commit to long term rates during the height of disruption caused by the Red Sea crisis.
Far East
The XSI® for Far East exports fell 7.5% in January, bringing the index down to 135.4 points.
December 2020 was the last time this index fell below 140 points.
The index for imports into the Far East is the first of the XSI® indices to fall below 100 post the pandemic rates boom. It fell to 99.4 points in January, down 4.7% from December and the lowest it has been since January 2021.
Europe
The biggest drop across the XSI® indices in January was for European imports. It fell by 18.4% to 143.8 points. This is the second biggest month-on-month drop on this trade, beaten only by the 19.2% drop in April 2023.
While the XSI® for European imports posted the biggest drop in January, the index for European exports was the only one that rose in January, driven up by Asia-bound cargoes while Transatlantic trade lanes fell. A 1.5% increase from December leaves the index at 163.0 points.
US
The XSI® for US imports fell by 2.0% in January, leaving it at 182.1 points. This is the lowest it has been since June 2021 and 54.4% lower than in January 2023.
US exports fell by a similar 2.4%, leaving its XSI at 125.1 points. Compared to other XSI® indices, US exports posted a relatively small 18.6% drop from a year ago.
While less directly impacted by the Red Sea crisis, US shippers are still feeling the ripple effects.
For example, services between the Far East and US East Coast are facing a double-whammy of diversions away from the Suez Canal and restrictions in the Panama Canal. (albeit now an improving situation on the latter). Spot rates from Far East to US East Coast has subsequently increased by 118% since early December 2023.
Despite sailings from the Far East to US West Coast not requiring either the Suez or Panama canal, spot rates have still increased by 132% since early December.
Get the latest insight and information on the Red Sea crisis on the Xeneta newsfeed (insert link).
Get the full XSI® report here.
Note: Xeneta's XSI® is compiled from the latest crowd-sourced ocean freight rate data aggregated worldwide. Companies participating in the benchmarking and market analytics platform include names such as ABB, Electrolux, Continental, Unilever, Nestle, L'Oréal, Thyssenkrupp, Volvo Group and John Deere, amongst others.
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