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Xeneta Shipping Index (XSI®) October 2023: Upturn in the long-term ocean freight shipping market proves to be a false dawn

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OSLO : Any hopes of a revival in long-term ocean freight shipping rates were short-lived after the latest data from Oslo’s Xeneta indicated the market is once again in decline.

In September, the Xeneta Shipping Index (XSI®), which tracks real-time rates developments on a month-to-month basis, revealed global long-term contracted rates had increased for the first time in 12 months.

This raised the question of whether it was a sign of a resurging market or merely a temporary halt in its decline.

It now appears September was indeed a false dawn with last month’s 0.2% increase being followed by a drop of 2.6% in October.

The Global XSI® now stands at 165.3 points.

The answer to the contrasting fortunes on the XSI® in September and October could be found in the Far East, where we saw some unusual, and seemingly one-off, behaviors. For example, Korea to Australia and New Zealand grew 2% in September yet dropped 31.1% in October.

This is not usually the time of year when we see major swings in the XSI® due to the relatively low number of contracts becoming active. However, this will change in the New Year when more contracts are signed, most likely at lower rates than the contracts they are replacing.

Emily Stausbøll, Xeneta Market Analyst, said: “Knowledge is power when entering negotiations, so shippers should be armed with the latest data and intelligence in the Xeneta platform to understand the long-term XSI® trajectory.”

Q1 and Q2 2024 could be a very interesting time on the XSI®.

European Imports & Exports
It was a mixed bag for Europe on the XSI® in October, with imports being the only sub-index to grow, while exports showed the biggest month-on-month decrease.

It is an interesting story in exports, particularly out of North Europe to China where rates are so low that, when terminal handling charges (THC) are factored, we can surmise that carriers are subsiding shippers on this backhaul trade.

US Imports & Exports
The sub-index for US imports fell 3.4% to 186.8 points in October – but it feels like a waiting game before the big market swings in May next year when new lower priced contracts come into effect.

The XSI® sub-index for US exports fell by 1.2% to 131.6 points in October. It is now 19.7% lower than a year ago, which is the smallest year-on-year drop across the XSI® indices. All other indices have fallen by at least 50% from October 2022.

Far East Import & Exports
The index for exports out of the Far East fell by 6.2% in October to 152.8 points – this is a 75.1% drop from a year ago and the lowest the index has been since February 2022.

The index for imports into the Far East fell to 108.8 points in October, 6.2% lower than September. With long term rates just 8.8% higher than the start of 2017 (the base period for this index), this is the lowest any sub-indices of the XSI® has been for two years.

Volumes of imports into the region recorded there highest ever month in August and, while this will be welcomed by carriers, it has less impact on the overall market due to their being plenty of capacity on the backhaul trades.

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