The XSI is the average of all long term rates in the market, and therefore, the index drop in January is more likely caused by the expiry of contracts signed back in the fourth quarter (Q4) 2022 at higher rates rather than shippers putting pen to paper on agreements at lower rates in the past month, Xeneta said.

Shippers may be reluctant to commit to long-term rates during the height of disruption caused by the Red Sea crisis, the Norway-based ocean and air freight rate benchmarking and market analytics platform said in a release.

The XSI for Far East exports fell by 7.5 per cent 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 by 4.7 per cent from December last year and the lowest it has been since January 2021.

The biggest drop across the XSI indices in January was for European imports. It fell by 18.4 per cent to 143.8 points. This is the second biggest month-on-month drop on this trade, beaten only by the 19.2 per cent drop in April last year.

However, the index for European exports was the only one that rose in January, driven up by Asia-bound cargoes while trans-Atlantic trade lanes fell. A 1.5-per cent increase from December leaves the index at 163 points.

The XSI for US imports fell by 2 per cent in January, leaving it at 182.1 points. This is the lowest it has been since June 2021 and 54.4 per cent lower than in January 2023.

US exports fell by a similar 2.4 per cent, leaving its XSI at 125.1 points. Compared to other XSI indices, US exports posted a relatively small 18.6 per cent drop from a year ago. While less directly affected by the Red Sea crisis, US shippers are still feeling the ripple effects.

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. Spot rates from Far East to US East Coast has subsequently increased by 118 per cent since early December 2023, the Xeneta release said.

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 per cent since early December.

Fibre2Fashion News Desk (DS)