Contract rates on selected major routes are following the pattern of spot rates, and according to the latest Xeneta Shipping Index (XSI®), there have been significant drops in long-term contracted rates on the likes of the Far East-Europe route.
The freight rate benchmarking platform says that although they have yet to match the scale of the decline in spot rates, newly contracted long-term rates from the Far East to the Mediterranean have dropped by 30% since the end of September, also falling by 12.4% into Northern European ports.
In view of current trends, with spot rates tumbling 70% on selected trades like the Transpacific, Xeneta CEO Patrik Berglund questions whether shippers will agree to the contract rates - as next year's tenders approach - when spot rates are so much lower. “What we may well see is shippers looking to transfer volumes to the spot market, spooking carriers desperate to tie in business. The result? Carriers could be forced to lower those coveted contracted rates."
He added that reefer rates on the eastbound transpacific trade were holding up better than their dry counterparts, increasing the attractiveness of reefer containers to carriers.
Xeneta experts also predict that there may be some challenges internationally as well as on intra-Asia trades this winter due to the continuation of the zero-Covid policy after Xi Jinping's re-election as the country's general secretary.
