Xeneta - Experts & Thought Leaders

Middle East ceasefire and Lunar New Year will see ocean container freight rates fall further in February - with carriers now taking action to slow the market decline. Latest data from Xeneta – the ocean and air freight intelligence platform – shows average spot rates from the Far East stand at USD 3 795 per FEU (40ft container) into North Europe and USD 5 085 per FEU into the Mediterranean – down 22% and 13% respectively since 1 January. Falling spot rates  Early data suggests spot rates will fall further on 1 February, down 5-10% on both trades. From the Far East to the US East Coast, average spot rates decreased by 7% during January to stand at USD 6,417 per FEU. On the US West Coast, spot rates are USD 5 021 per FEU, down 14% in the same period. Spot rates on both US-bound trades flattened in the second half of January following a sharp early-month decline. Heading into February, spot rates could fall further, particularly into the US West Coast, while the US East Coast holds a little firmer. Exports slowdown Peter Sand, Xeneta Chief Analyst, said, “Ceasefire in the Middle East does not suddenly mean there is now safe passage through the Red Sea for all container ships – but it is enough to cause a change in market sentiment and this has a real impact on freight rates." “We must factor Lunar New Year celebrations in the Far East, which traditionally sees a slowdown in containerised exports at this time of year, but there is little doubt the evolving situation in the Red Sea is contributing to falling freight rates.” Capacity management Ocean container carriers are taking action to slow the market decline through capacity management Ocean container carriers are taking action to slow the market decline through capacity management. On the trade from the Far East to the Mediterranean, blanked sailings will steadily increase to reach 38 900 TEU (20ft equivalent container) of shipping capacity in the week commencing 24 February. This is an increase of 318% from current levels. From the Far East to North Europe, blanked sailings will reach 75,700 TEU of shipping capacity by 24 February – an increase of 449%. Impact with ceasefire Sand said, “Carriers will not sit on their hands while freight rates collapse. They will do everything they can to keep rates elevated and have got much smarter at capacity management in recent years.” Phase 1 of the ceasefire between Israel and Hamas commenced on 19 January and is expected to last 42 days before entering Phase 2, which could see a permanent ceasefire agreed. Importance of freight rates in February Sand said, “February may be crucial in understanding how ocean container freight rates will develop in 2025. The ceasefire in the Middle East is set to enter Phase 2 and we will see exports increase from the Far East in the first half of the month following the Lunar New Year." “Despite the decline in January, we must remember that average spot rates are still massively elevated on the Far East front hauls to Europe and the US compared to pre-Red Sea crisis, so they potentially have a long way to go." Change in ocean container shipping “Carriers are going to find it extremely difficult to keep rates elevated, especially given the record number of ships entering service, so we could see markets collapse if there is a large return to the Red Sea." “The situation is far from certain and we know how suddenly and dramatically the outlook can change in ocean container shipping. There is still a long way to go before a lasting peace deal is agreed in the Middle East and other geopolitical factors, such as Trump’s tariff proposals, could come into play and put upward pressure on freight rates.”

Strikes at ports on the US East Coast and Gulf Coast, which would have caused an economic and supply chain crisis, have been called off – with ocean container freight rate growth now expected to slow or fall. The strikes were set to begin on 15 January and would have forced the closure of ports from Maine to Texas. This has now been averted after a tentative agreement over a new six-year master contract was reached between the International Longshoremen’s Association (ILA), which represents port workers, and the US Maritime Alliance (USMX). Supply chain and economic disaster Data from Xeneta - the ocean and air freight intelligence platform – shows average spot rates from the Far East to the US East Coast had already increased 26% since 14 December and were expected to rise further had the strikes gone ahead. Emily Stausbøll, Xeneta Senior Shipping Analyst, said: "The agreement between the ILA and USMX must be welcomed because a strike had the potential to be a supply chain and economic disaster, but it still highlights the difficulties facing shippers in managing supply chain risk." Level of uncertainty Data from Xeneta, the ocean and air freight intelligence platform, shows average spot rates from the Far East Emily Stausbøll added: "We have seen average spot rates on the trade from the Far East to US East Coast spike 26% since mid-December to stand at USD 6800 per FEU (40ft container), with carriers poised to add further disruption surcharges up to USD 3000 per FEU should the strike have gone ahead." She continues, "It is extremely difficult for shippers to protect supply chains and manage freight spending with this level of uncertainty and when the stakes are so high." New long-term contracts Emily Stausbøll added that spot rates may now begin to fall – but shippers still face other supply chain threats in 2025. She said: "Looking ahead, it is likely spot rate growth will now soften on trades into the US from the Far East, suggesting a brighter outlook for shippers negotiating new long-term contracts." Emily Stausbøll adds, "Signs of a weakening underlying global market in 2025 are also seen in falling average spot rates from the Far East to North Europe in January, which had spiked 51% between 31 October and 1 December last year. Shippers must remain cautious, however, because it will not take much for freight rates to begin spiralling once again, particularly given the ongoing conflict in the Red Sea and the return of Trump to the White House, which could escalate the US-China trade war."

Industry pioneers at the Xeneta Summit 2024, in Amsterdam, the Netherlands, have been told ocean container shipping must harness the power of machine learning to protect supply chains in an increasingly complex and volatile market. In a keynote speech to announce Xeneta’s new in-platform Ocean Market Rate Outlook, Chief Product Officer - Fabio Brocca explained how machine learning will transform the way freight is bought and sold by predicting market movements on the world’s major corridors up to six months into the future. Advancement in machine learning Fabio Brocca said: "While nobody can predict COVID-19 or the Red Sea Crisis, procurement professionals are constantly making decisions based on their outlook for the next few quarters. When there is so much volatility and uncertainty across global supply chains, providing market guidance feels like an impossible task." He adds, "The industry has come a long way using technology and data to improve every procurement process, but thanks to advancement in machine learning and AI we can now go even further by providing explainable predictions on how the market is likely to develop in the future." Market Rate Outlook product The new Market Rate Outlook product is unique to the ocean container shipping industry Xeneta is the pioneering ocean and air freight data and intelligence platform. The new Market Rate Outlook product is unique to the ocean container shipping industry. The machine-learning model leverages the 500+ million ocean freight rate datapoints in the Xeneta platform, combined with 20+ parameters, such as fleet and capacity data, import and export volumes, and macroeconomic factors such as GDP, inflation, PMI and fuel prices. Xeneta’s market analyst The outlook also includes commentaries by Xeneta’s market analyst team, highlighting assumptions and key factors affecting the freight rate trends. Finally, Xeneta’s customers can provide real world feedback which is anonymised, aggregated, and used to deepen the market outlook further. Fabio Brocca said: "The Market Rate Outlook is not a crystal ball and it cannot predict major events, such as the Red Sea crisis or COVID-19." Market Rate Outlook Fabio Brocca added: "The potential for unknown disruptions to impact the market does not negate the value of the outlook. This is about empowering procurement professionals to make informed decisions based on how the market is likely to develop." He continues, "Market Rate Outlook explains the assumptions behind its predictions so businesses can make strategic decisions with confidence. We are only at the beginning of the journey, but I have no doubt that a more scientific approach to decision-making will become fundamental to the way freight is procured across the market." Global supply chains The conflict has seen spot markets spiral across the world’s major trades in 2024 The Xeneta Summit brings together stakeholders from across the ocean and air freight industries to discuss the challenges facing global supply chains, which this year focuses heavily on the ongoing impact of conflict in the Red Sea. The conflict has seen spot markets spiral across the world’s major trades in 2024, including by more than 450% from the Far East to North Europe and almost 400% into the US West Coast. Xeneta market data Fabio Brocca believes index-linked contracts, which see the freight rate paid by shippers tracked against market movements, will become increasingly important in the wake of growing market uncertainty. He said: "Businesses are facing up to the reality of market volatility and are using data to regain some control. Shippers and service providers are turning to index-linked contracts based on Xeneta market data to give assurance the freight rates being paid remain fair and competitive, while also ensuring containers are shipped during times of severe disruption." Global supply chains In addition to announcing the Market Rate Outlook, Xeneta has launched a series of further in-platform products at the Summit, including enhanced industry-specific freight rate benchmarking and transit time comparison across trade corridors and carriers. Fabio Brocca concludes: "Whether it is predicting rate trends, index-linked contracts or being able to benchmark freight rates across peers and carriers, it is now incredibly difficult to navigate global supply chains without having access to the most comprehensive and reliable market data."