Xeneta’s Shipping Index (XSI) has been falling for the past nine months as shippers renegotiated lower contract rates on the back of sharply falling spot rates. However, the 27.5% drop for May marks a collapse. Patrik Berglund, CEO of Xeneta, stated: “If industry observers were left wondering just how bad it could get for carriers after the 10% fall in long-term rates seen in April, here’s the answer. Monthly declines have become the ‘new normal’ at present, but this is a collapse.”
“The reasons behind that are manifold, but the main driver is the fact that May marks the point when existing 12-month contracts in the US come to a conclusion and new agreements come into force. These reflect the reality of today’s subdued markets, so are priced much, much lower than their predecessors. The impact of that on the wider industry is here for all to see.”
The sub-index for the US import trade fell 40.6% in May month-on-month and has now lost 54.6% of its value since peaking in October last year. Xeneta said this equated to the average contracted rate for containers moving from Asia to the US West Coast falling by $6,140 per feu year-on-year, a 76% drop for this mainline trade.