Xeneta: Ocean freight rates plummet from peaks across European export trades, but main plot fails to reveal full story
Xeneta crowdsources real-time rates data from leading global shippers, allowing it to assess the very latest market moves. Unsurprisingly, given current sentiment, Xeneta’s European export intelligence shows both spot and long-term ocean freight rates have collapsed compared to the historical highs recorded in the space of the last year to eighteen months.
The bigger they are…
“All arrows are pointing down, with dramatic falls across the board,” says Peter Sand, Chief Analyst, Xeneta, when referring to prices on the five main European export trades (to the Mediterranean, Far East, Middle East, US East Coast, and South American East Coast).
“The biggest lanes are also the biggest losers, with the Far East corridor down 69% year-on-year. Spot prices for the trade are now just under USD 600 per FEU, equivalent to 18% below the pre-pandemic average of 2019. The US East Coast route has experienced the sharpest decline in absolute dollar terms, with prices now a staggering USD 6 000 per FEU lower than their peak in mid-May 2022. As of early May spot prices on this recently very strong trade stood at USD 2 745 per FEU.”
Long-term contract developments in the region are, on the whole, equally depressing for carriers, with agreements signed within the last three months down an average of 45% against peak prices. The falls range from a 26% decline on the Middle East bound trade, to a fall of 59% on the short haul to the Mediterranean.
Despite the apparent weakness of the market, Sand is keen to highlight the complexity behind the headline collapse, with a range of individual trends emerging across the corridors.
Starting with the spot rates he points out that the Far East corridor is the only trade where rates are currently below 2019 levels. By contrast, exports to the South American East Coast are currently 96% more expensive than they were in 2019, while rates to the Middle East are 47% up for the same period.
“And this is despite respective falls on the corridors of 43% and 40% from peak prices,” he notes. “So, the question arises, does this point to relative strength, or the capacity for further heavy falls in the months to come?”
On the long-term market, the scale of the drops can, Sand emphasizes, distract stakeholders from the size of the gains recorded throughout the pandemic. He says this is particularly evident on two key trades:
“Here we see rates in early May up more than 100% against 2019 levels. The trans-Atlantic front haul to US East Coast is a commanding 114% up, while the smaller, yet still essential, trade into the South American East Coast also shows triple-digit growth, up 111% for the same period.
“In fact, the only trade with long-term rates significantly below 2019 levels is the shortest of them all, to the Mediterranean. Here we see rates down 38% since 2019 (and 59% since their peak in mid-August 2021), with current prices at USD 524 per FEU.”
All eyes on Germany
Sand concludes that the rollercoaster rates ride will be “a natural focus” for logistics professionals attending the main Munich shows Transport Logistic 2023 and Air Cargo Europe 2023 this week, but warns against oversimplifying current developments.
“There’s real value to be unlocked in diving down into the data for individual corridors,” he says. “There’s never a ‘one size fits all’ trend in this market, and current developments in European exports make that very clear. Intelligence pays, for all stakeholders in this dynamic industry.”