Data from container market intelligence outfit Xeneta showed a deceleration in the price rise of long-term container contracts and a continued weakening of spot rates, "suggesting prices may have peaked."
“The carriers have enjoyed staggering rates rises, driven by factors such as strong demand, a lack of equipment, congestion and COVID uncertainty, for 17 of the last 19 months,” said Xeneta CEO Patrik Berglund. “July has seen yet more upticks across the board, but the signs are clear there is a ‘shift’ in sentiment as some fundamentals evolve.”
July's contract rate increases were the slowest since January, reflecting an easing of spot rate. Xeneta also noted lower demand, with volumes to and from Europe falling 3% and 6% respectively over the first five months of 2022.
The change in the market will be cold comfort to shippers who have endured sky-high rates in recent years.
“That said, nothing is certain. US and European ports are still congested, industrial action on the logistics chain is spreading globally and, of course, we still have the threat of COVID and its impact on economic activity, particularly in China. There’s a lot of variables at play, so it’s imperative to stay tuned to the latest intelligence when negotiating long-term contracts to achieve a competitive edge,” said Berglund.
Xeneta found that with spot rates dipping and long-term rates pegged high, its customers are looking to renegotiate contracts and ease costs.
“Our customers, mainly large volume shippers, now find themselves in a stronger negotiating position. Our survey showed that 44% no longer feel confident in the stability of long-term contracts - of that 44%, some 22% said they were more likely to allocate lower volumes only to cheaper contracts, while 22% preferred to move allocation to the spot market as soon as prices dip below long-term rates. It’s going to be an interesting few months ahead,” said Berglund.
Xeneta’s XSI index shoed a 1.9% increase for European imports in July, giving an annual increase of 62%; for exports, a 3.9% rise for the month brought a 92% increase on-year.
“Far East exports have enjoyed a bumper 12 months, now standing 150% up year-on-year, with another 2% rise this month (again, a slower rate of increase). Imports edged up 1.1% and now stand 53% higher than July 2021,” said Xeneta.
The US had the strongest performance on XSI, up 5.9% for July to bring a 173% increase on-year; exports also rose 5%. The US export market is shifting however, with declining volumes compared to pre-pandemic. The ratio of loaded imports to loaded exports to the US rose from 1.9 in 2019 to 2.5 in the first five months of 2022.
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