May saw highest monthly increase in global ocean freight rates: Xeneta

In May, the most dramatic development was seen in US import costs, which jumped by 65.1 per cent to stand 205.4 per cent up year-on-year, as new long-term contracts (which usually run from the start of May to April) came into force. The XSI US export benchmark showed a less pronounced, but still strong, upwards move of 9.9 per cent.

European long-term rates rose by 11.3 per cent on the import index (122 per cent up year-on-year), while exports recorded their largest ever monthly jump of 27.6 per cent, an impressive 138.3 per cent increase on May 2021.

Far East import and export indices both raced upwards, with the former rising by 17.4 per cent and the latter soaring 35.4 per cent, the largest ever monthly rise for this measure. Seen from a year-on-year perspective, the respective benchmarks stand 57.1 per cent and 174.8 per cent up.

“This is a staggering development,” commented Xeneta CEO Patrik Berglund. “Just last month we were looking at an 11 per cent rise and questioning how such continued gains were possible. Now we see a monthly increase of almost a third blowing the previous XSI records out of the water. The breath-taking gains reflect the sharp increase of the average of all valid long-term contracts, as older contracts, with lower rates, expire and are replaced by newer agreements with much higher rates. It’s certainly a challenging time to be a shipper.”

Oslo-based Xeneta’s XSI is compiled from real-time data crowdsourced from leading shippers, delivering in-depth insights into key global trades.

Berglund further noted: “It goes without saying that the main carriers are achieving astronomical results at the moment. Last month we saw deeply impressive figures from OOCL and Maersk and now we have Zim posting a 113 per cent year-on-year revenue jump, with an EBITDA of $2.5 billion. As a result, the management team has upgraded its full-year EBITDA to $7.8-8.2 billion.

“Shippers, on the other hand, are being bled dry, while the lockdowns in China, allied to blanked sailings from the carriers to protect softening spot rates, have, and may continue to, impact upon the supply chain. Not as much cargo as anticipated has been moved over the last couple of months and, with the peak season approaching, that could cause added disruption. That leaves shippers in a position where they’re paying through the nose for services that, to be diplomatic, may not always meet expectations. It’s a very challenging time at present.” 

With the difficulty of predicting developments on even a month-to-month basis, Berglund said that mid- to long-term forecasts are ‘nigh on impossible’. Continuing regulatory investigations into carrier practices could impact on business fortunes (although no evidence of collusion or unfair practices has been uncovered so far), while China’s zero COVID policy may continue to hit industrial and manufacturing output. Exactly how these things progress, not to mention the ongoing ramifications of geopolitical upheaval, casts a shadow of uncertainty over those looking to tailor the best logistics solutions for long-term needs.

ALCHEMPro News Desk (KD)