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Xeneta: rising long-term rates and port congestion worsen cargo owner woes

Xeneta: rising long-term rates and port congestion worsen cargo owner woes
Wait times at Antwerp are up to 10 days

Long-term contracted ocean freight rates are 86% higher than at this point last year after another month of high demand, over-stretched infrastructure and difficult negotiations for shippers according to data from freight rate benchmarking company Xeneta.

Data from the Oslo-based company, which crowd sources real-time rates from leading shippers, shows that August’s rates only showed a 2% rise compared to July, although July’s rates were 28.1% higher than June.

According to the platform, there appears to be little sign of relief on the horizon, with increasing port congestion and relentless demand ahead of the all-important pre-Christmas period.

Patrik Berglund, Xeneta CEO said: “In the context of 2021, a 2.2% monthly increase in rates appears modest, but in any other year this is an excellent result for carriers. Remember, this is yet another rise on the back of the largest ever monthly increase in July.

“So, while some may have been expecting – read ‘hoping for’ if you’re a cargo owner – an adjustment downwards, we’re seeing a further demonstration of the powerful position liner operators find themselves in. They really are holding all the cards… and winning big.”

Carriers have reported strong financial results lately, with OOIL disclosing a US$2.8bn net profit for the half-year, the best results in the group’s history, while ZIM managed a net profit of US$888m in the second quarter.

Xeneta’s Long-Term XSI Public Indices for August show that every region is seeing import and export benchmarks edging upwards.

In Europe imports rose by 0.5%, while exports climbed 3%. Although the pace of growth has slowed compared to recent months, it still leaves the respective benchmarks up 123% and 49% year-on-year.

Results in the Far East followed a similar pattern, with imports nudging up a further 1% (up 51% since August 2020) and exports jumping by 3% (a massive 116% up year-on-year).

The XSI paints the same picture in the US, where imports increased by an additional 2% and exports climbed 1% month-on-month. The benchmarks now stand 67% and 17% up compared to the same time last year.

Berglund added: “While we can’t be certain of a repeat of the astronomical monthly increases the industry has grown accustomed to, further gains are certainly not of the question. There’s still a dearth of equipment, high demand and, worryingly, very congested ports that are choking up the supply chain for shippers and retailers.

“For example, in Europe Maersk is advising customers of wait times up to 10 days at Antwerp, while Hapag-Lloyd reports that voyage delays have tripled in the first half of 2021 compared to the same period in 2020. A round trip between the Far East and Europe now takes approximately 100 days to complete. The situation isn’t much better in the US with wait times of five days (and increasing) at the Port of Los Angeles.”

The Xeneta CEO noted that landside infrastructure is “simply overwhelmed”, with the congestion tying up vessels, and their sought after containers, in an ever-worsening cycle of delays.

He noted: “With the holiday season logistical rush round the corner things may get worse before they get better and that’ll have an obvious knock-on effect on rates.”

Companies participating in Xeneta’s crowd-sourced ocean and air freight rate benchmarking and market analytics platform include ABB, Electrolux, Continental, Unilever, Nestle, L’Oréal, Thyssenkrupp, Volvo Group and John Deere.