Report: Ocean Freight Rates Remain Steady as Carriers Balance

31 July 2020

 

The carrier segment appears to be negotiating the coronavirus storm with some success safeguarding its vital long-term ocean freight rates reports Xeneta in its latest XSI® Public Indices report which tracks the ocean freight market based on crowd-sourced data from leading shippers.

 

“We’ve seen contracted rates holding comparatively steady while spot rates have actually been rising from April and through May and June,” says Xeneta CEO Patrik Berglund. “Given the short- and mid-term macro-economic situation that’s taken many by surprise. The key has been carriers conducting a delicate balancing act to remove tonnage and adjust routes in accordance with demand. However, it’s difficult to maintain that for the long-term and, let’s face it, the virus is not going anywhere fast – so what’s the next step?”

 

Analyzing over 200 million data points, covering more than 160,000 port-to-port pairings and major shipping including ABB, Electrolux, Continental, Unilever, Lenovo, Nestle, L’Oréal, and Thyssenkrupp, amongst others, Xeneta reports the index crept up turning slightly positive in July. The report highlights after two months of slight rate declines - although nowhere near as dramatic as industry observers had feared given the pandemic’s severity – that the index is basically flat for 2020 and down less than one percent year-over-year.

 

Berglund attributes the relatively minor movements to the proactivity of owners, as they continue to perform a “delicate balancing act” with supply and demand. He says readers of the index may be surprised by the moderately small adjustments, given the huge economic impact of the virus, but highlights that carriers are constantly moving to ensure rates are protected.

 

Xeneta’s latest intelligence shows that spot rates have however begun to slide on key Far East-North Europe and the Far East - US West Coast trades, suggesting the recent reinstatement of routes and tonnage is driving down prices. Berglund says that carriers will face a difficult decision to either keep reintroducing tonnage and try and gain market share, yet undermine rates, or withhold services to keep propping up rates.

 

The XSI® Public Indices’ regional analysis of major trading routes painted a mixed picture for July. After four months of decline, imports on the European XSI® increased slightly while still down slightly for the year. The export benchmark however registered its steepest fall since October with a decline of two percent but remains up over three percent up year-on-year. Developments in the Far East were negative, with a significant drop in import rates and a smaller drop in the export figure.

 

The U.S. markets showed a marginal decline in imports while exports registered a healthy rise reversing two months of decline. Despite the increase, Xeneta reports the index remains down over three percent year-on-year and down more than two percent so far in 2020.

 

“The carriers have been working flat out on strategy and that has maintained a relatively solid rates course in this most trying of times. However, they can’t control external factors and key indicators are undoubtedly a cause for concern,” concludes Berglund. “It’s a highly complex picture, and that creates a real challenge for both carriers to effectively manage rates and shippers to know what they should be paying to gain real value for cargoes. With that in mind, the latest market intelligence is absolutely key.”

BY THE MARITIME EXECUTIVE 07-30-2020 08:42:50

 

Comments (0)


Today
8:03am
Hi Jenna! I made a new design, and i wanted to show it to you.
8:03am
It's quite clean and it's inspired from Bulkit.
8:12am
Oh really??! I want to see that.
8:13am
FYI it was done in less than a day.
8:17am
Great to hear it. Just send me the PSD files so i can have a look at it.
8:18am
And if you have a prototype, you can also send me the link to it.

Monday
4:55pm
Hey Jenna, what's up?
4:56pm
Iam coming to LA tomorrow. Interested in having lunch?
5:21pm
Hey mate, it's been a while. Sure I would love to.
5:27pm
Ok. Let's say i pick you up at 12:30 at work, works?
5:43pm
Yup, that works great.
5:44pm
And yeah, don't forget to bring some of my favourite cheese cake.
5:27pm
No worries

Today
2:01pm
Hello Jenna, did you read my proposal?
2:01pm
Didn't hear from you since i sent it.
2:02pm
Hello Milly, Iam really sorry, Iam so busy recently, but i had the time to read it.
2:04pm
And what did you think about it?
2:05pm
Actually it's quite good, there might be some small changes but overall it's great.
2:07pm
I think that i can give it to my boss at this stage.
2:09pm
Crossing fingers then

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