Container shipping industry faces record collapse in long-term rates: Xeneta

According to Xeneta’s Shipping Index, the container shipping industry is facing a meltdown due to the surging contract cost of shipping containers. During May, the cost has shockingly decreased by 27.5%, which is significant, as it is also the largest monthly fall ever witnessed in the last nine months.

Patrik Berglund, the CEO of Oslo-based Xeneta states that industry observers are worried about the drop in rates as it paints a sad picture of the industry. He further stated that it shows the reality of the market in the long run and called it a collapse and added that May is the month when the US contracts come to a conclusion and a new agreement comes into force. The drop in long-term rates is overwhelming as the rates have moved to pre-pandemic rates. This is a cause of worry for carriers who are managing all odds even with dropping rates.

The drop in the US import sub-index was only matched by the decline in Far East exports, which fell by 38.6% in May alone. However, the sub-index has now come to half its value in 2023 and stands now at 58.5% compared to the previous year. In terms of capacity, containerized exports from the Far East experienced a 10.5% drop in the first quarter and are now only 3.3% higher compared to the figures from the same period in 2019.

There are not many carriers who can defend the long-term rates in this scenario, especially when the vessels that were ordered during the pandemic are now beginning to swell overall industry capacity.