Xeneta Summit 2024 – Day Two Recap

Attendees of the 2024 Xeneta Summit have described it as the “home of Seafreight”, a “truly world class event” and “an inspiring event that gathered the brightest minds shaping the future of global trade”.

Yes, it delivers on thought leadership and practical insights. But more than anything, it centers around a shared belief that the world of ocean and air freight requires greater transparency, collaboration, and a fairer playing field for LSPs and BCOs alike – with less market swings and unexpected behavior.

As Patrik Berglund, CEO and co-founder of Xeneta, touched upon in his CEO Keynote on day one:

“When we set out to build Xeneta we had a clear goal of providing visibility into a volatile and opaque market – and to use that visibility to make better, data-informed decisions.​”

But change cannot happen without change.

Tonia Luyxk, CRO at Xeneta (pictured above), observed in her welcome address that the shipping industry has for too long been an industry that spends a lot of time looking back. And while there is great value in drawing insights from what has already been, the true opportunity lies in looking forward. Using recent disruptions as a foundation to build resilience and innovate for the future. 

Products such as Xeneta’s new in-platform Ocean Market Rate Outlook will go a long way towards transforming the way freight is bought and sold, by predicting market movements on the world’s major corridors up to six months into the future.

The other string procurement professionals have in their bow is their peers.

Drawing insights from industry-players and understanding what’s top of mind is an equally valuable layer to achieving market transparency. These insights can be used to explain market movements or behaviour. They can also be neatly coupled with real-time freight intelligence to ensure you adopt a nuanced response, specific to your business needs.

Because as W. Edwards Deming once said, "without data, you're just another person with an opinion." 

Below is a recap of day two insights, delivered by industry-leaders on the 19^th October, in Amsterdam. Day one insights can be found here.

How to build an index

Following an insightful conversation with Bjorn Vang Jensen, Founder and CEO of Nanook Management Consultancies, and Sami Nazar, Category Manager International at Decathlon, on day one, Erik Devetak returned to the topic of indexing on day two.  

This time, Devetak (pictured below left) tackled the impact of data granularity when signing index-linked freight contracts, and parameters needed to ensure a successful index-model. As noted:

"You must have trust in three things. Your data source, your indexing partner and unforeseen circumstances"

Niall van de Wouw, Xeneta Chief Airfreight Officer (pictured above right), also presented practical steps for shippers & forwarders to consider when approaching index-linked contracts within airfreight. These steps include having an answer for the following six questions:

1. What is the starting rate?
2. Which market should you follow?
3. How often should you reset the rates?
4. How do you calculate the new rate?
5. Who are your potential index partners?
6. Where to put the emergency break?

Rapidly changing consumer demands and market trends

The rise of e-commerce was another major topic of discussion.

As the global demand for online shopping continues to grow, logistics companies are struggling to keep up with the rapid shift in consumer behavior.

Jeffrey Van Haeften, Senior VP Cargo Commercial Worldwide at Emirates SkyCargo (pictured below, top left) noted that “Two years ago, if you asked a lot of people in the industry about Shein and Temu they had not heard about them. Don’t get me wrong e-commerce is not just China, it is worldwide, but these are major players.

“Tariffs can hamper growth in the near future and we could see de minimis changes but you cannot change people’s buying behavior so e-commerce is here to stay.

“Fashion was ocean freight 20 years ago, now we talk about fast fashion and it gives a different perspective to what is coming. Every new generation will have access to a mobile phone and credit card to buy goods in this way.”

Van Haeften was joined by Michiel Potjer, Chief of Staff to EVP Cargo / Strategic Sustainability Lead at Air France-KLM, Conor Brannigan, VP Strategy at Atlas Air, and host, Heiko Schuhmacher, Senior VP Global Air Logistics at Kuehne+Nagel Management AG (pictured below) – all of whom pointed out that this surge in demand is what's driving companies to rethink their fleet and capacity management strategies.

In particular, companies have had to reallocate capacity away from less profitable trade lanes. This shift has been driven by the imbalance between inbound and outbound traffic during peak seasons, particularly in e-commerce-dominant markets like China.

This session also touched on the growing impact of regulations on the supply chain. From new rules on lithium-ion battery transportation to changing e-commerce de minimis levels (the value threshold below which no duties are charged), businesses are facing increasing complexity in their operations. Logistics companies are advised to stay nimble to avoid compliance issues and potential cost increases, and to maintain close collaboration between the industry and regulators to ensure new laws are both practical and effective.

The Role of Technology in Sustainability

As well as navigating rapidly changing consumer demands, global pressure to reduce emissions continues to mount – even in the face of extreme market volatility. 

The above panellists emphasized that digitalization and technological innovation are critical to driving sustainability forward. By leveraging AI and advanced data analytics collectively as an industry, logistics companies can optimize their routing, reduce fuel consumption, and better align their operations with sustainability goals.

The discussion also touched on how technology can help businesses track and report their emissions more accurately, giving them a competitive edge in meeting customer demands for greener supply chains.

Smarter planning and space optimisation were also offered as readily-available ways for the industry to positively respond to sustainability goals.

However, implementing these solutions is not without its challenges.

One of the most significant obstacles discussed was the high cost of sustainable aviation fuel and its limited availability. SAF is currently about three times more expensive than traditional jet fuel, making it a costly option for many companies. Additionally, the infrastructure needed to support widespread use of SAF—such as building new refineries—requires massive investment, with estimates running into the trillions of dollars.

A common theme raised during this session was the need for government incentives to make sustainable fuels more accessible and affordable. Without sufficient regulatory support, it will be difficult for the aviation and maritime sectors to meet their ambitious net-zero emissions targets by 2050.

What's top of mind for the EU Commission? 

In a first-of-its-kind conversation at the Xeneta Summit, Emily Stausbøll, Senior Shipping Analyst at Xeneta (below left), was joined by Birthe Panhans, Head of Unit at Directorate General Competition at the European Commission (below right), to discuss merger cases in ocean shipping liners and air cargo, and the implications of the expiration of the 2010 Horizontal Black Exemption Regulation on carrier alliances – among other things. 

Panhans started the conversation by outlining how the Commission cooperates with industry in its investigations and how the Commission works with competition authorities in other jurisdictions to align on merger assessments and remedies, such as for the recent Korean Air/Asiana case.

Panhans also highlighted the Commission's perspective on vertical integration of shipping lines and freight forwarders which differs from some industry views, as the Commission focuses on preserving competition. Moreover, Panhans shared that the new European Commission leadership is expected to continue the focus on digital transformation, innovation, greening the economy and ensuring European companies can and do compete, both locally and globally.

The Commission is currently reviewing the proposed DSV/DB Schenker merger and is gathering market feedback. Active participation from industry is encouraged.

Impact of regulations on the ocean and airfreight markets

Glyn Hughes, Director General at TIACA, joined Niall van de Wouw to share his thoughts on the impact of regulations on the supply chain. In particular, Hughes explained that there are two main aspects to consider - the e-commerce impact and potential trade policy changes.

Regarding e-commerce, Hughes noted that the de minimis level is currently very high in the US at $800, while it is much lower in Europe at around $150 on average. He suggests that lowering the de minimis level would directly impact consumers, as they would have to pay duties and taxes on more items purchased through e-commerce.

However, this could also lead to supply chains being rerouted, adding complexity, cost, and time.

While domestic production was discussed, Hughes explained that this type of trade protectionism would artificially redirect consumer demand away from the products they want to purchase, potentially towards less desirable alternatives.

In relation to trade policy changes, both Hughes and van de Wouw drew on previous threats to airlines shipping – the 9/11 attacks, 2010 tone cartridge incident and the more recent attempted incendiary device attacks at DHL sites in Birmingham and Leipzig – as reasons why states need to constantly update regulations to stay ahead of evolving threats.

As well as a need to stay nimble, the industry is facing the additional challenge of potential fragmentation. Countries such as Canada and the European Union may look to introduce their own bespoke solutions, adding further complexity and cost to the supply chain.

Other regulations discussed included the industry's goal of achieving net-zero emissions by 2025, the existence of robust regulations governing the safe transportation of lithium batteries, and recent changes in cargo security regulations in the United States, where the Transportation Security Administration (TSA) and Customs and Border Protection (CBP) have introduced new requirements for additional data elements to be provided for air cargo shipments.

Let's talk about the US

With the effects of the recent US East Coast strikes still being felt, imminent US Elections and ongoing trade animosities between China and Mexico, the United States is top of mind for shippers, freight forwarders and carriers alike. 

This panel – featuring Thomas Degroote, Global Air & Ocean Freight Procurement Manager at Becton Dickinson, Quentin Margain, Global Commercial Director at XPD Global, Peter Sand, Chief Analyst at Xeneta, and hosted by Emily Stausbøll – considered the macro-environment of the US market, as well as potential scenarios regarding trade restrictions or tariffs.

In 2022, Bloomberg's Economics model projected a 100% chance of a recession happening in the US in 2023. Fast forward 2 years, and not only has the US market not had a recession, it is showing positive signs of a potential "soft landing" scenario – showcasing the US economy's impressive resilience.

It also shows the resilience of the supply chain. Having learned to adapt to disruption, companies are looking at network optimization to mitigate supply chain risks, and leveraging alternative routes like Canada and Mexico to diversify and alleviate disruptions. In fact, the industry is already seeing significant growth of foreign factories in Mexico, with an expected 453 new factories by 2025, of which 19.8% will be shifting from Asia (up from 4% two years ago). This shift is attributed to the new US tariffs and political uncertainty, leading to an increase in trade through Mexican ports, particularly the major port of Manzanillo.

The panel also recommend building agility into the supply chain, front-loading, and exploring alternative transportation options, such as testing air freight shipments or using smaller regional carriers, to be prepared for potential disruptions.

But there are limitations.

Not all ports and carriers have the capacity to handle additional volume, and with proposed trade policy changes under a new US administration, the industry could see an impact on the balance of trade and increased operational costs.

Panellists agreed that a swift resolution to the election process was needed to avoid prolonged uncertainty and the potential for new trade barriers or retaliation. When discussing the postponed US East and Gulf coast strikes, Peter Sand noted that "...contingency plans A, B and C are probably not enough, because in our base case, we don't expect the 15th January 2025 to deliver a new master contract. Will we see another strike? Maybe, most likely again for a few days or so, depending on who's running the white house at that point in time"

So how should you prepare?

First step is to acknowledge the difficulty of being proactive in the current volatile market, and noting that the model that worked in the past may not be applicable in the present. Monitoring market movements and trends is also paramount for making data-informed decisions at speed. Particularly, keeping an eye on the potential rise of Vietnam as a manufacturing hub in 2025 due to disruptions in China-US trade.

On top of this, infrastructure, including connectivity and transportation, will be necessary to support the flow of goods, so focus on scenario planning and fostering strong relationships with your LSPs.

Lessons learned from 2024 – and what we can take forward 

Keep the supply chain moving and providing solutions to customers.

This was a key message from the final session of the 2024 Xeneta Summit – hosted by Greg Knowler, Europe Editor at the Journal of Commerce (picture below, far right), and featuring Mark Fullarton, Director – Global Transportation at Zebra Technologies Corporation, Markus Panhauser, CEO for Germany and Switzerland at DHL Global Forwarding and Michael Amri, Global Sea Freight Business Development Manager at Hellmann Worldwide Logistics (pictured, in order below).

Another key message was around the need for a fairer market in relation to contracted rates, surcharges, and volume commitments. Over recent years, the market has seen extreme swings towards either a carrier's market, or a shipper's market – greatly disadvantaging the other at any given time. And while the panellists were in agreement that both sides need to be profitable, the volatile market swings isn't helpful long-term. 

As Panhauser noted: “Picking a number for a fair rate is difficult. There are long-term agreements of 12 months up to 36 months that are not exposed to rate hikes. But that might appear unattractive when rates are super low and shippers want to renegotiate – but then they are exposed again during the next crisis when there a rate hike.

“If a shipper asks for a 12 month rate but doesn’t guarantee a volume then it is not a reality anymore. If you commit both ways then it works, if you don’t commit then you have to live with the exposure.

“A good approach is to commit a certain part of your business that you can always deliver and have a floating part with a different solution, because if you sign up for your whole business it could be costly.”

While 2024 has been an unquestionably difficult year, the industry has found creative solutions, such as utilizing alternative carriers and services, to ensure timely delivery and secure a record year in container shipping. This creativity and agility is paramount if supply chains are to keep moving.

Here are six further takeaways from the panel: 

1. Disruptions in the supply chain have become the norm. Procurement professionals must evolve their strategies, leveraging data and technology to benchmark rates and manage costs in this dynamic market.
2. Reliability of ocean carriers has dropped to around 50-55%, leading to the need for alternative solutions like air freight or faster ocean services, though at a higher cost.
3. Surcharges from carriers have become a major challenge, with surcharges sometimes exceeding the base contract rate and reducing the value of long-term agreements. Carriers should aim for reasonable profitability, not unsustainable margins, and seek partnerships with shippers to find mutually beneficial solutions.
4. Flexible, collaborative contracts between carriers and shippers are key, with a mix of long-term and short-term commitments to manage volatility.
5. Standardizing and normalizing data across the industry could enable more effective use of AI and other tools to improve supply chain visibility and resilience.
6. Young professionals entering the industry must be agile, creative, and able to make quick decisions to navigate constant disruption.

Closing remarks

The 2024 Xeneta Summit provided attendees with a wealth of information on how to navigate the evolving landscape of global trade and freight logistics.

From the 2024 Ocean Market Recap, delivered by Michael Braun, VP of Customer Success & Solutions at Xeneta (pictured below, right), to the fireside chats with Chris Cooper, Global Senior Vice President, Ocean Freight at DP World Logistics (pictured below, left), and Prathibha Hampapur, Global Category Leader, Inbound Logistics at lululemon (pictured below, centre), attendees got to hear firsthand how global organisations are navigating the innovations and challenges of today's industry. 

In particular, Braun reviewed the ocean market and outlined how the 2024 conflict escalation has impacted shippers in varying ways.

Whether it’s leveraging market intelligence to drive better decision-making, adopting index-linked contracts to manage risk, or pushing for greater sustainability, the freight industry is clearly at a pivotal moment. With tools like Xeneta’s platform, a energised procurement community, and ongoing innovations in technology and data analytics, businesses have the opportunity to stay competitive in an increasingly volatile market.

Watch this space. 

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One final note: A big thank you to all who participated in our interactive homepage exercise during the summit and helped us raise donations for Effektiv Altruism Norge – a charity focused on evidence-based positive impact, specifically supporting their work with the Clean Air Task Force. This project promotes climate policies to regulate energy sources in electricity production, industry and transportation, and low-carbon technology innovations.