-
Ocean freight rates in May surged a historic 30.1% month-on-month for long-term container contracts, according to a rate benchmarking platform
-
Xeneta says long-term rates are up 150.6% year-on-year and 55% year-to-date
-
The high average of valid new long-term contracts as older contracts expire makes for the much higher rates
Long-term contracted ocean freight rates registered their highest-ever monthly increase in May, as the cost of locking in container shipments soared 30.1%, Xeneta, a rate benchmarking and market intelligence platform, said in a report on May 31.
The unprecedented hike, revealed in the latest Xeneta Shipping Index (XSI®) Public Indices for the contract market, means that long-term rates are now 150.6% up year-on-year. In 2022 alone, costs have climbed by 55%.
“This is a staggering development,” Xeneta chief executive Patrik Berglund said in a statement.
“Just last month, we were looking at an 11% rise and questioning how such continued gains were possible. Now we see a monthly increase of almost a third blowing the previous XSI records out of the water.
“The breath-taking gains reflect the sharp increase of the average of all valid long-term contracts, as older contracts, with lower rates, expire and are replaced by newer agreements with much higher rates. It’s certainly a challenging time to be a shipper.”
Oslo-based Xeneta’s XSI is compiled from real-time data crowdsourced from leading shippers, delivering in-depth insights into key global trades.
In May, the most dramatic development was seen in US import costs, which jumped 65.1% month on month to stand 205.4% up year on year, as new long-term contracts (which usually run from the start of May to April) came into force. The XSI US export benchmark showed a less pronounced, but still strong, upwards move of 9.9%.
European long-term rates rose 11.3% on the import index (up 122% y-o-y), while exports recorded their largest ever monthly jump of 27.6%, an impressive 138.3% y-o-y increase.
Far East import and export indices both raced upwards, with the former rising 17.4% and the latter climbing 35.4%, the largest-ever monthly rise for this measure. The respective benchmarks stand up 57.1% and 174.8% y-o-y.
“It goes without saying that the main carriers are achieving astronomical results at the moment,” Berglund notes.
“Last month, we saw deeply impressive figures from OOCL and Maersk, and now we have Zim posting a 113% year-on-year revenue jump, with an EBITDA of US$2.5 billion. As a result, the management team has upgraded its full-year EBITDA to US$7.8-8.2 billion.
“Shippers, on the other hand, are being bled dry, while the lockdowns in China, allied to blanked sailings from the carriers to protect softening spot rates, have, and may continue to, impact upon the supply chain,” Berglund said.
Continuing regulatory investigations into carrier practices could impact business fortunes (although no evidence of collusion or unfair practices has been uncovered so far), while China’s zero COVID policy may continue to hit industrial and manufacturing output.
Exactly how these things progress, including the Ukraine war, casts a shadow of uncertainty over those looking to tailor the best logistics solutions for long-term needs.
“The best advice we can offer, as ever, is to try and stay as strategically limber as possible, while always keeping up to date with the very latest industry intelligence. In a fast-moving market, that really is the only way to achieve the optimal value for your business and stakeholders,” Berglund said.
Xeneta’s XSI is compiled from the latest crowd-sourced ocean freight rate data aggregated worldwide. Companies participating in the benchmarking and market analytics platform include ABB, Electrolux, Continental, Unilever, Nestle, L’Oréal, Thyssenkrupp, Volvo Group and John Deere.
