Long-term market turns a corner as rates fall: Xeneta shipping index

The figure is 5 per cent lower than the October 2023 figure.

Movements on the global XSI during 2024 have been largely driven by the Far East exports XSI sub-index, which includes the major front-haul trades to the United States and Europe.

When the global XSI increased in July, August and September, so too did the Far East Exports sub-index by 12.6 per cent, 10.7 per cent and 6.2 per cent respectively, a release from the Norway-based ocean and air freight rate benchmarking and market analytics platform said.

Therefore, when the global XSI fell for the first time in three months in October, the Far East exports sub-index also fell 7.5 per cent to stand at 194.4 points.

The declining XSI will be welcomed by shippers entering negotiations for new long-term contracts, Xeneta noted.

However, there is still volatility in the market when viewed at a trade level as carriers fight back against softening freight rates, it said.

This can be seen most clearly on the major front-haul trades from the Far East to North Europe and Mediterranean where average spot rates are set to increase on November 1, possibly by more than 10 per cent.

Tender season for new long-term contracts is already under way for many European shippers, and therefore, 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, said Xeneta.

That is why it is vitally important that European shippers pay close attention to market developments during November as 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, it added.

Fibre2Fashion News Desk (DS)