Long-term box rates rise to new highs

 Long-term ocean freight contract prices continued to rise in April, with all of the key headhaul markets for the US, Europe and Asia seeing year-on-year and month-on-month rises, new figures from Xeneta reveal.

Figures published today based on the digital rates specialist’s Xeneta Shipping Index (XSI) indicate that the global XSI long-term market as a whole continued to rise in April, increasing by a further 4.1% to reach 140.29 points. With both short-term and contracted rates maintaining their momentum, the benchmark is now up 21.1% year-on-year and has risen by 23.5% since December 2020.

Xeneta’s long-term contract rates umbrella looks at any contract that is valid for longer than 88 days, although it said that in most cases, these are 12-month contracts. That overall index is a combination of worldwide trade-weighted corridors not limited to US, Europe and Far East indices.

Regional main trades

Xeneta said US imports on the long-term market XSI reached yet another all-time high in April after increasing 3.5% month-on-month to 134.08. While exports also rose, jumping by 3.3% to 93.77 points, the exports benchmark remains down 5.7% compared to the same period of last year. 

European imports on the XSI “continued their meteoric rise”, jumping by an additional 5.4% month-on-month to 164.33.  Exports also rose in April, albeit to a lesser extent, increasing by 2.3% to 129.08.

Far East exports continued their steady rise, appreciating a further 5.3% month-on-month to 176.10. Imports on the long-term market XSI increased only marginally in April, rising by just 0.2% to 116.33 points, with the benchmark now 15.7% higher than the same period of 2020.

Xeneta noted that after many months of price rises for cargo capacity buyers, there was “anything but relief in April”, reflecting the fact that “all trade corridors on the long-term XSI showed indicators pointing relentlessly upwards”.

CEO Patrik Berglund commented: “It’s been another incredible month, in a unique year, for the container shipping segment. In the US, we continue to see severe delays and bottlenecks, with strong demand – driven in part by changing e-commerce habits – driving rate development. Some shippers are reportedly paying double the contracted rates they enjoyed just one year ago.”

In addition, Xeneta also cautions that its short-term market XSI “is now showing increases on trans-Atlantic trade lanes, suggesting further long-term rates pain for shippers may lie ahead”.

Delays and bottlenecks

Xeneta noted that the US trades “also continue to be hampered by severe delays and bottlenecks, with some shippers reportedly paying twice as much as a year ago for contract business. Whether demand will be maintained in the long run will depend on consumer buying habits post lockdown. However, it is likely that at least some of the increased demand for e-commerce will be maintained. Combined with low inventories, demand could be higher for longer, reducing the likelihood of a return to rock bottom rates in the medium term.”

On the European import markets, it noted: “The calamity that was the Ever Given has begun to have real-world implications for an already strained market. Estimates suggest the blockage of the Suez Canal could impact North Europe until June, with ports overwhelmed with cargo. “

It noted that in their rush to get ships back to Asia to fulfil new orders, carriers have been dumping some containers where they can, while trying to load as many empties as possible, adding: “As such, shippers are being hit twice, once from initial delays and secondly by the news that their shipments are at the wrong port, with no immediate plans to relay their boxes to their correct destination.”

It continued: “Although these actions should mean schedules will be impacted less compared to if lines had anchored and waited outside their original destination, it will be of little comfort to shippers who have urgent consignments in the wrong location. The situation became so bad that Maersk recently stopped accepting bookings, albeit these have now resumed.

“However, schedules are expected to be impacted into May and to remain tight in Q3. All this means that shippers should not expect any immediate relief from the current situation and with carriers holding all the cards, further rate increases are not out of the question.”