The global ocean container shipping market reached a tipping point in July, with long term rates on major fronthaul trades showing signs of life just as spiraling short-term rates begin to soften, according to Xeneta.
The Xeneta global shipping index (XSI), which covers all valid long-term contracts in the market, edged up by 2.5 per cent in July to stand at 151.5 points.
The underlying XSI sub-index for Far East Exports, which includes the world’s biggest fronthaul trades to Europe and the United States, increased by 12.6 per cent in July to 178.8 points, the Norway-based ocean and air freight rate benchmarking and market analytics platform said in a release.
This coincides with short term rates on major trades from the Far East to the United States and Europe beginning to soften in July from the massive increases seen over recent months.
“Long-term ocean container shipping rates remained subdued despite massive increases on the short term market in May and June, but that is starting to change,” noted Emily Stausboll, Xeneta senior shipping analyst.
Increasing long term rates and decreasing short term rates means the spread is narrowing between the markets, which presents a delicate balance ahead of long term contract negotiations between shippers and carriers later this year.
Stausboll reiterated that ocean supply chains remain under pressure and there are potential disruptions on the horizon, including diversions in the Red Sea, the threat of union action at ports on the US East and Gulf Coasts and a possible Trump presidency that may see businesses rush to ship goods ahead of new tariffs on Chinese imports.