Indian Transport & Logistics
Shipping

Xeneta says rates declining, capacity availability easing

Global spending on shipping will be record high this year; congestion & delays continue to plague shippers

Xeneta says rates declining, capacity availability easing
X

Shippers are seeing spot rates and premium surcharges fall in many trades, and getting capacity allocations is becoming easier, according to the quarterly Ocean Deep Dive report from Xeneta.

"However, freight rates are still high. Global spending on shipping will be record high this year, and congestion and delays continue to plague shippers on several major trades," says the report.

On the world's largest trade, namely intra-Asia, container volumes in the first four months of the year are up only 1.6 percent, which is a considerable slowdown compared to a gain of 9.1 percent in 2021. "The interconnectedness of far eastern supply chains means that slowing volumes on this trade are evidence of the region's slowdown in manufacturing and production."


In the first four months of the year, exports out of the far east are down by 2 percent, says the report. "This is also why the gradual re-opening of Shanghai is not expected to affect container shipping demand hugely. Some of the jams in manufacturing around the region will be cleared as goods start moving again but muted global demand for manufactured goods will limit the bounce back."

Are long-term rates peaking?
The average long-term rate out of the far east has continued to rise since January, up by $600/FEU on 1 June, and fast closing in on the spot market - something that has already happened on several of the major global trades. "Of the top six trades out of the far east, four of them have average long-term rates above those on the spot market, split evenly between intra-regional and longer haul trades."

Schedule reliability - what's that?
Globally, schedule reliability has stabilised around 35 percent this year, not showing considerable signs of improvement, the report said. "However, the average delay of late ships fell in April, down to 6.4 days."

Demolitions = 0
Despite the overall falling trend, charter rates remain far above breakeven levels, even for the oldest, most inefficient ships with the highest voyage costs. Ship-owners wouldn't choose to send a ship to be demolished if they can continue to earn money on it. "This explains the total lack of demolition this year. Charter rates need to come much further down before ships that really can't sail anymore start to be demolished."

Freight outlook
Long-term rates will be much slower to fall than those on the short-term market but shippers will experience this in different ways, says the report. Those with three-month contracts will have the chance to negotiate lower rates on a regular basis, allowing them to benefit quicker from a falling market. On the other hand, those on 12-month contracts will have to wait much longer to see lower rates unless they can renegotiate their current contract, the report added.

Jyothi Shankaran

Jyothi Shankaran

Associate Editor, STAT Media Group. He has worked with IndiaSpend, Bloomberg TV, Business Standard and Indian Express Group. Jyothi can be reached at jyothi@statmediagroup.com


Read Full Article
Next Story
Share it