Spot rates out of Far East almost 2000 USD cheaper per FEU than long-term rates - Xeneta
The ocean freight rates in the Far East were plummeting by an average of 75% across the six major trading lanes since the start of the year. By comparison, long-term rates are proving more resilient, with a fall of ‘just’ 13%, according to Xeneta.
The latest analysis from Xeneta highlights a market in flux. From historical highs, spot rates have collapsed since early summer. In January this year they were at least 2 000 USD per FEU higher than contracted rates on the selected routes.
However, they now languish 1 900 USD per FEU below new long-term agreements from the last three months.
“This is a jarring reversal of fortunes, with the traditional spot rate premium being completely overturned on key global corridors,” comments Peter Sand, Chief Analyst, Xeneta.
Sand points out that some routes are yet to experience long-term rate declines, pushing the divide between the two rates categories to eye-catching levels. The Far East to US East Coast leads the way here, with contract rates sitting 11% above start-of-year prices.
“The difference between short- and long-term agreements here is unprecedented,” he explains. “This is currently the largest divide, with long-term rates now USD 5 030 per FEU more expensive than spot rates. That’s a 237% premium. If you go back to January, the shoe was on the other foot, with the spot rates sitting USD 4 900 per FEU higher.”
Sand notes that the US trades are the only two of the six leading corridors where long-term rates are up since January. Putting this into context, he explains that long-term rates to the US climbed more slowly than other trades, with later tendering processes contributing to the fact that “they only peaked in Q2.”
Xeneta’s data, which is crowdsourced in real-time from major global shippers, shows the biggest change is taking place on the Far East to North Europe trade. Here spot rates have gone from a position of a USD 5 640 per FEU premium on 1 January 2022, to currently sitting USD 4 460 below long-term rates on 1 December. This translates to an 83% fall, while long-term rates have restricted their decline to 24%.
The trade with the smallest premium for long-term rates is the Far East - Mediterranean, where the average long-term rate is ‘only’ USD 1 900 higher than the average spot rate.
Xeneta is the ocean and air freight rate benchmarking and market intelligence platform transforming the shipping and logistics industry. Xeneta’s powerful reporting and analytics platform provides liner-shipping stakeholders the data they need to understand current and historical market behavior – reporting live on market average and low/high movements for both short and long-term contracts. Xeneta’s data is comprised of over 300 million contracted container and air freight rates and covers over 160,000 global ocean trade routes and over 40,000 airport-airport connections. Xeneta is a privately held company with headquarters in Oslo, Norway and regional offices in New York and Hamburg.
