Xeneta - Experts & Thought Leaders

Xeneta has launched an index-linked contract (ILC) simulator to help shippers navigate ocean freight container market volatility and end procurement inefficiency. The new ILC Simulator – now available in the Xeneta platform – allows shippers to compare traditional fixed-rate contracts with index-linked contracts using sample corridor data or their own historical ocean container freight rates. Shippers and logistics services The simulator is an important first step towards index-linked contracting, which is rising in prominence as shippers and logistics service providers try to prevent long-term agreements being torn up, or regularly renegotiated, in the wake of disruptions such as Covid-19, the Red Sea Crisis and US-China trade war. Fabio Brocca, Xeneta Chief Product Officer, said: “Xeneta’s index-linked contract simulator is a major advancement for the container shipping industry. It offers the important first step towards realising a more efficient, data-driven freight procurement strategy that is built to withstand the realities of today’s geo-political and economic trade landscape." Benefits of index-linked contracts Xeneta is uniquely positioned to provide the depth, freshness and reliability of data Brocca added: “Market volatility is causing contracts and supplier relationships to break down, bringing the inefficiencies of traditional RFQ tender processes into sharper focus." "Shippers came to Xeneta asking for help and I am proud to be leading the charge towards a better way to buy and sell freight by launching this simulator and opening eyes to the benefits of index-linked contracts.” Xeneta freight rates Xeneta already provides data for hundreds of index-linked contracts, which ensure freight rates remain aligned to market movement. This allows shippers and providers to concentrate on service delivery and supply chain resilience as part of a long-term partnership. As the pioneering neutral provider of ocean and air freight intelligence, Xeneta is uniquely positioned to provide the depth, freshness and reliability of data required to base a successful ILC against. Xeneta platform Xeneta platform calls upon more than 600 million contracted freight rates sourced from shippers The Xeneta platform calls upon more than 600 million contracted freight rates sourced from shippers and freight forwarders across both long and short-term markets. Brocca has advised ILCs risk failure if they are not based on the appropriate data for a shipper’s individual requirements. He said: “We have seen costly mistakes when shippers do not base their ILC on the right data, such as using a 20ft container index for pricing a 40ft container or not leveraging data across long and short term markets." new Xeneta ILC simulator Brocca added: “With the new Xeneta ILC simulator, customers can get started in a matter of minutes in understanding the intricacies of this new way of procuring freight so they can avoid costly errors and move forward to implementation with confidence." “We understand this is a significant shift in the way many businesses procure freight, so it is important we provide guidance and best practices in creating ILCs, which will then also help with industry standardisation.”

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."