Global ocean freight rates decline in October after brief respite: XSI

06 Nov '23

2 min read

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Insights

October 2023 saw global ocean freight rates decline by 2.6 per cent, with the Xeneta Shipping Index at 165.3 points, erasing hopes of recovery after a brief 0.2 per cent increase in September 2023.
Market volatility was marked, especially in Far East trades, while Europe and the US showed mixed results and general declines in October 2023.

Global ocean freight rates saw a 2.6 per cent drop in October, with the Xeneta Shipping Index (XSI) at 165.3 points, according to Xeneta, a leading provider of freight rate data. The XSI showed a modest 0.2 per cent increase in September, ending a year-long trend of decline.

Market analysts had been cautiously optimistic in September when the XSI reported growth for the first time in twelve months, prompting speculation about a potential market resurgence. Nonetheless, October's figures have dispelled such hopes, indicating that the previous month's growth was a temporary blip rather than a lasting recovery, as per Xeneta.

The fluctuating market is particularly evident in the Far East trades, where rates from Korea to Australia and New Zealand rose by 2 per cent in September, only to plummet by 31.1 per cent in October. These erratic movements are atypical for this time of year, which usually sees a stable XSI due to fewer active contracts. However, Xeneta analysts expect the new year to bring more activity, with contracts likely to be signed at rates lower than their predecessors.

In Europe, the XSI presented a mixed picture in October. European imports saw growth, whereas exports recorded the largest monthly decrease, particularly from North Europe to China, where rates have dropped so low that carriers appear to be subsidising shippers, especially when terminal handling charges are considered.

The US market is seemingly in a holding pattern, with the XSI sub-index for imports dropping by 3.4 per cent to 186.8 points in October. The full impact of the market's adjustments is expected to be felt in May of the following year when new, lower-priced contracts are set to commence. The sub-index for US exports also saw a decline of 1.2 per cent to 131.6 points in October, the smallest year-on-year decrease across the XSI indices.

The Far East experienced significant downturns as well, with export indices falling by 6.2 per cent to 152.8 points – a dramatic 75.1 per cent drop from the previous year and the lowest since February 2022. Import indices also decreased by 6.2 per cent to 108.8 points, marginally higher than the baseline set in 2017, indicating a subdued market despite a record high in import volumes in August.

ALCHEMPro News Desk (DP)

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