After two months of steady increases in long-term contracted rates for containership operators, the latest XSI Public Indices report from Xeneta shows a reversal of fortunes, with rates falling by 4.2%. According to the report’s crowd-sourced data – covering over 160,000 port-to-port pairings, with 110m data points – all major trading corridors saw month-on-month declines in April, plunging the indices to its lowest level since June 2018.
Oslo-based Xeneta is an ocean freight rate benchmarking and market analytics platform taking data from shippers and freight forwarders.
“This is a real turn of events,” Xeneta CEO Patrik Berglund commented today. “The past two months have seen the industry halt a long-term rates decline and achieve some much needed respite, with rates rises of 2.5% in February and a more modest 0.5% in March. In that context a 4.2% fall comes as a slight shock to the system and will have many in the industry reassessing the short- to medium-term forecasts for their businesses.”
Berglund cited overcapacity on the European trades with Ocean Alliance increasing activity and new slots for a standalone HMM service and continued fall out from the US-China trade war as some of the reasons for the reversal.
April’s XSI Public Indices show rates figures firmly in the red. European imports fell by 4.8% (2.3% down on year end 2018), while exports declined by 1.9% (2.4% down for the year). For Asia the import benchmark dropped by 2.1% while exports slumped 3.6%. The export figure has now fallen by 4.5% since the start of the year and 9.7% between July 2018 and April 2019, indicating what Xeneta said in release today is a prolonged downward rates trend for the segment to contend with.
US trades have suffered the same fate as their counterparts in April, derailing what was beginning to look like a steady upwards trajectory. After two straight months of increases the export benchmark fell by 2% (although it remains 6.4% higher than year end 2018), while the import index dropped by 3.4%. It is now 3.2% down year-on-year.
“Looking ahead it’s difficult to identify obvious breaks in the clouds,” Berglund stated. “Geopolitics remain stubbornly unpredictable, with on-going uncertainty over US-China relations, while no one – not even the people at the very top – appear to have a clear view of what is happening regarding Brexit and its consequences.”