Ocean carriers are facing the threat of lower contract rates in 2024, as spot market prices remain under pressure.

A new analysis by Xeneta shows that its long-term freight rate index declined by 2.6% in October and has fallen by 62.2% in the past 12 months. The firm expects the decline to continue in the new year, with an even more severe drop in the index in January.

Short-term container freight rates are also under pressure, with the Freightos Baltic Global spot index declining a further 7% in October to its lowest level since April 2018.

Despite announcing significant general rate increases (GRIs) on the Asia-North Europe route for 1 November, market rates are still below breakeven levels. For example, one Shenzhen-based forwarder is offering to ship cargo from Ningbo or Shanghai to Antwerp, Hamburg, or Rotterdam for $600 per 20ft or $950 per 40ft.

Asia-Mediterranean rates are also under pressure, with the FBX 13 value decreasing 14% during October to 4% below 2019 levels.

On the transpacific, spot rates from Asia to the US west coast are 15% higher than in 2019, while rates to the east coast are 17% lower.

Transatlantic spot rates from North Europe to the US east coast remained in the doldrums in October, with the FBX 22 component at $1,045 per 40ft – a huge 48% below 2019 rate levels.

CMA CGM has announced a raft of FAK price hikes on its head haul transatlantic services for 23 November, saying that rates on the route have fallen to “unsustainable levels.

The overall picture is bleak for shipping lines, with both spot and contract rates under pressure. The situation is likely to get worse before it gets better, with Xeneta expecting a “stormy time” for the industry in 2024.

Source: theloadstar.com