02 October 2019, Wednesday
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THE latest XSI Public Indices report from Oslo-based Xeneta shows that long-term contracted ocean freight rates for shipping lines declined slightly globally by 0.1 per cent in September, indicating that rates are continuing to fall this year.
According to Xeneta's XSI indices, which utilises crowd-sourced shipping data - covering 160,000 port-to-port pairings, with 110 million data points - long-term rates have decreased since summer 2018, excluding an unexpected increase in May, a statement from the company said.
Both individual carriers and carrier alliances have blanked sailings to counter this downwards trend, but with limited success.
There's a number of factors creating unease among the sector's shipowners and operators.
"Some are of the industry's own making, while others certainly are not. For example, we have Evergreen pushing ahead with an order for ten 23,000-TEU vessels in a market that is already awash with overcapacity," said Xeneta CEO Patrik Berglund.
"This is understandable when The Ocean Alliance, of which it is a member, wants to challenge 2M for ULCV [ultra large container vessel] strength - and therefore economies of scale - in an ultra competitive market, but it doesn't help rebalance the supply-demand scales," he said.
"Then we have the ongoing saga that is the trade war. The US recently announced a delay in its next wave of tariff increases, but there is zero certainty of what comes next for industry players.
"For example, will be there be more front-loading of cargo to avoid further tariffs - bolstering demand and rates - or has the necessary stockpiling already transpired? And of course, we have the IMO regulated move to more expensive 0.5 per cent low sulphur fuel oil for 2020. This will have obvious bottom line ramifications.
"It is, without doubt, a high pressure situation for carriers at present. But, as we've seen in the past in this dynamic sector, things can change very quickly," said Mr Berglund.
In terms of September's activity, the European import benchmark recovered some of the ground lost in August when it fell 1.4 per cent, after increasing by 0.2 per cent. However, the export index decreased by 1.1 per cent in September. Nevertheless, European exports remain 4.2 per cent up year on year.
Imports on the Far East XSI registered their third straight month of declines, dropping 0.8 per cent, but the export index edged up 0.3 per cent. It has now risen 5.1 per cent since the end of 2018.
Developments in the US were contrasting, with the import benchmark rising by 0.3 per cent and the export figure declining by the same margin. Both benchmarks are up compared to September 2018, with imports up 20.3 per cent and exports rising 3.7 per cent.
