Data from Xeneta, a platform that benchmarks freight rates, suggests rates have held comparatively steady for May. This comes despite the ramifications of the global coronavirus pandemic which has left the container market with a stark imbalance between demand and supply
Xeneta’s XSI Public Indices report showed a 1.2% decline in freight rates following a 0.7% increase in April, leaving the index up 1.7% for 2020 so far. The company’s chief executive Patrick Berglund said this could be attributed to the proactive approach taken by container ship operators, who withdrew market capacity and adjusting sailings in an attempt to balance supply and demand.
Mr Berglund said “Given the debilitating effects of the pandemic on global economic activity, there may have been a belief that rates would freefall, but not so.”
“Contracted rates have held up well, some would say surprisingly so, while spot rates on key routes have also stood strong. With some national governments stepping in to support the industry – such as those in South Korea and Taiwan, who have both announced emergency funding of US$1Bn for shipping – a ‘blood bath’ has largely been avoided. Nevertheless, it’s early days and many owners have posted worse than expected Q1 results and will be dreading going public with Q2 figures.”
In Europe, the import benchmark fell for the third consecutive month by 2%, down 2.2% since the start of 2020 but exports rose by 0.8% and the export index remains up 1.7% for the year but down 6.1% year-on-year. In the US, import and export benchmarks fell by 1.5% and 3.4%, respectively.
Xeneta cautioned that the future will remain marked by uncertainty and said it is “absolutely essential” for all stakeholders in the shipping value chain to access the latest intelligence in order to know the optimal value when negotiating rates.
Mr Berglund said owners and operators are “clearly up for the fight and moving decisively” when possible and pointed to proposals from representatives of the sector’s largest carriers, the Digital Container Shipping Association, to introduce a paperless bill of lading and potentially save billions of dollars in costs.
“Shippers have to stay equally as limber in this environment, keeping up to speed with real-time market developments. Nobody knows what will happen next, but with the insights enabled through the latest data you can at least position your business to gain competitive advantage. That is more essential now than ever.”The data gathered is based on crowd-sourced data from leading shippers, the report utilises over 200M data points, covering more than 160,000 port-to-port pairings, to provide a real-time picture of industry developments.
Companies participating in Xeneta’s crowd-sourced data platform include Electrolux, Continental, Unilever, Lenovo, Nestle, L’Oréal, and Thyssenkrupp, among others.
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