Xeneta Shipping Index hits new high in Aug
Carriers remain on course for another bumper year of profits despite softening spot rates and supply chain issues.
The global Xeneta Shipping Index (XSI) rose again in August to 453.2 points, another month in which the XSI has set a new record. This was up 4.1 percent from July 2022 and 121.2 percent from August 2021.
Despite softening spot rates, uneven demand and ongoing supply chain issues, the world's leading carriers remain on course for another bumper year of profits, says the latest update from Xeneta. "New long-term contracted rates are dropping on key trading corridors, following on the heels of declining spot prices. However, since they're replacing expiring agreements with considerably lower rates, the average paid by all shippers is still climbing."
So, the question is, for how long? "There's no doubt the major carriers have had their way in negotiations for some time," says Patrik Berglund, CEO, Xeneta. "The spectacular results they saw in 2021 will no doubt be repeated, and even bettered this year as seen by the huge profits that defined many Q2 financial reports. But there is a sense that change is in the air.
"Volumes are dropping, and as expected, long-term rates are beginning to follow the trend set by the spot market. When you add in an uncertain macroeconomic outlook, continuing supply chain issues such as the industrial action we've seen occurring or threatened, in major ports in Germany, the UK, and the US and disruption in China due to the zero-Covid policy, it's an unpleasant cocktail for the industry to swallow."
In addition, problems have seemingly been exacerbated by climate change with low water levels impacting both power and factory production as well as hinterland logistics chains, Berglund added.
U.S. shippers still paying high rates
The XSI for U.S. imports was at 565.48 points at the end of August, following a month-on-month increase of 6 percent and an increase of 183 percent from last year. This suggests that the average rate shippers are paying continues to increase across all valid contracts, the report said, adding shippers looking to sign new long-term contracts should expect to see rates below the current market average.