Xeneta sees first crack in container carrier spot rate consensus

 Xeneta believes its latest information has shown a blip in the spot rate’s recent beat.

Up to this month the general rate increases (GRI) have been across the board and adhered to by carriers in what was acknowledged by many to be a tight market, with the Red Sea diversions, absorbing excess capacity, while growing port congestion and increased demand all played a role in the more than 150% surge in spot rates in some major trades.

In what could prove to be the turning point for shippers, the mid-July rate GRI was not backed by all lines, with some offering lower rates, this was considered important because it meant shippers could shop around for better spot rates.

 “Early data received prior to 15 July suggested average spot rates would increase on the Far East to US West Coast trade by 2% as carriers looked to push through GRIs. However, new data received from shippers fresh from negotiations shows average spot rates did not increase – in fact they have fallen by $50 per per feu since 14 July,” said a Xeneta briefing note.

The market analytics platform said this “small crack in the dam” could be significant as it demonstrates that “shippers are regaining some negotiating power”.

Xeneta reminds its customers that the cause of this year’s rate spikes is the Red Sea crisis and this is unlikely to be resolved any time soon, however, spot rates in some trades have softened at times, even with the diversions in place.

According to Xeneta data Far East to US West and East Coast trades reached a peak on 1 February but then softened considerably by 32% and 33% respectively by 30 April. European headhaul trades reached a Red Sea crisis peak earlier in mid-January, before retreating in similar fashion to the US services, falling 33% into North Europe and 32% into the Mediterranean by the end of April. Nevertheless, Xeneta also cautions: “Shippers will be hoping it is a case of history repeating, but there are other storm clouds on the horizon.”

Industrial action in Europe and the US could yet derail container shipping services again, while the prospect of a Trump election victory could raise the spectre of increased tariffs on imports from China and many other parts of the world, which could yet see a surge in demand that will again bolster rates.

Although rates remain high, with average spot since last December up by 382% from the Far East to the US West Coast, by more than 300% to the US East Coast and 457% to North Europe.

Even as Xeneta believes it has seen early signs of a plateau in spot growth, other indices are not showing the same signs that a change is imminent. Drewry’s WCI composite inched upwards by 1%, but spot rates to North Europe rose 3%, while the Shanghai to Los Angeles index declined 3%.

The SCFI does show a decline into the overall index with a fall of over 132 points over the last week to 3542.44 points.