Long-term ocean freight rates fall by over 60%: Xeneta

01 Sep '23

2 min read

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Insights

Long-term ocean freight rates continued their decline in August, marking a year of steady decrease for carriers, according to Xeneta.
Carriers are facing challenging times in the contract market due to weak demand and increasing ship capacity.
US import and exports are increasing being affected by the restrictions that are in place for the Panama Canal transits.

Long-term ocean freight rates continued their decline in August, marking a year of steady decrease for carriers, according to Xeneta. Carriers are facing challenging times in the contract market due to weak demand and increasing ship capacity, resulting in widespread long-term rate reductions.

Xeneta Shipping Index (XSI) data reveals a 7.8 per cent drop in contracted rates this August, adding up to a 62.7 per cent decrease from last year, the Oslo-headquartered ocean and air freight rate benchmarking and market analytics platform said in a press release.

Routes from the Far East, the busiest globally, witnessed a significant 75 per cent year-on-year (YoY) contract value reduction based on Xeneta's regional sub-index.

This pattern differs from the spot market, where major trade rates have risen in recent months. As the long-term market usually follows spot market trends, the current advantages for shippers might be temporary.

The XSI for European imports fell to 178.7 in August, down by 3.4 per cent from the previous month. Over the past 12 months, this sub-index has fallen by 60.1 per cent.

The XSI for European exports also fell by just an inch, as it declined by 2.8 per cent from July, bringing it to 188.1 in August. This sub-index has now been halved over the past, falling by 52.4 per cent from August 2022.

US imports as well as exports are increasingly being affected by the restrictions in place for Panama Canal transits.

The XSI for Far East exports has now fallen by almost 75 per cent since August 2022—the most of any major XSI import or export region.

At 117.7, the Far East imports XSI fell by another 2 per cent in August to 120.2 points, the lowest of all the XSI sub-indices. Since this sub-index peaked exactly a year ago, rates have come down by 51.1 per cent.

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