The ocean container shipping market turned another corner in October as the Xeneta Shipping Index (XSI®) fell for the first time since June.
The Global XSI®, which measures all valid long-term rates in the market, dropped 5.6% to stand at 157.0 points in the biggest month-on-month decrease since January.
It also leaves the Global XSI® 5.0% lower than October 2023.
Movements on the Global XSI® during 2024 have been largely driven by the Far East Exports XSI® sub-index (which includes the major fronthaul trades to the US and Europe). When the Global XSI® increased in July, August and September, so too did the Far East Exports sub-index by 12.6%, 10.7% and 6.2% respectively.
It is therefore no coincidence that as the Global XSI® falls for the first time in three months in October, the Far East Exports sub-index also fell 7.5% to stand at 194.4 points.
A curve ball in tender negotiations
The declining XSI® will be welcomed by shippers entering negotiations for new long-term contracts.
They may be buoyed further when viewing the Xeneta global weighted average spot rate which has declined rapidly since peaking in July to reach its lowest level since April at 3066 per FEU (40ft container), placing further downward pressure on the long-term market.
However, there is still volatility in the market when viewed at a trade level as carriers fight back against softening freight rates.
This can be seen most clearly on the major fronthaul trades from the Far East to North Europe and Mediterranean where average spot rates are set to increase on 1 November, possibly by more than 10%.
Tender season for new long-term contracts is already under way for many European shippers so it is no coincidence these are the trades where carriers are fighting so hard to keep the spot market elevated in the hope it strengthens their hand at the negotiating table.
European shippers may be spooked by the uptick in average spot rates on these trades at the beginning of November, but it is clear the fundamental direction of the market is headed downward.
That is why it is vitally important that European shippers pay close attention to market developments during November because these desperate efforts by carriers to push up spot rates are unlikely to succeed for too long and it could have a significant bearing on the long term rates they secure for new contracts coming into force in January.
Read the latest Xeneta press release for more insight from Peter Sand on carriers’ efforts to halt the spot market decline and strengthen their hand during negotiations with European shippers for new long-term contracts.
Other XSI highlights:
Europe
- The XSI® sub-index for European Imports edged down to 173.8 points in October, 0.8% lower than September.
- The XSI® sub-index for European Exports fell for the eighth consecutive month in October to stand at 111.9 points, though the pace of decline has slowed as it fell only 0.6% from September.
US
- After four consecutive months of increase, the XSI® sub-index for US Imports fell 5.2% in October to 175.2 points.
- US Exports was the only XSI® sub-index to post increases in October, up 5.0% to 119.1 points.
Far East
- While the The XSI® sub-index for Far East Exports showed a substantial drop in October (down 7.5%), the Far East Imports sub-index remained stable at 96.6 points, down just 0.1% from September.
