SIMIC

In its Q3 Ocean Shipping Market report, Xeneta noted record spreads between spot and long-term rates on many trades, giving the example of a US$2,900 per FEU spread between the markets on the Asia-US West Coast trade.

Xeneta's XSI index hit a record high in August, suggesting falling spot rates are yet to be reflected in contract rate data, leaving container lines in a position to cash in on contracts fixed in recent months, reports UK's Seatrade Maritimes News.

"However, as volumes fall, carriers are increasingly cutting rates for new contracts and offering better deals to existing customers who haven't got all their volumes locked in," said Xeneta.

The structural outlook for the container market was bleak in the report, with spot rates falling to levels last seen in the early stages of the pandemic. For the Asia-US West Coast, rates fell faster than they rose in the wake of the pandemic.

"It took 146 days to get from $5,000 per FEU to $9,000, whereas on the way down, it took 119 days for the $5,000 per FEU mark to be breached," said Xeneta.

Behind the drop in demand is a difficult economic situation for consumers in the West. Inflationary pressure has led to increased spending on fuel and food, lowering demand for imported manufactured goods.

The company expects inflation to continue to suppress demand as consumer confidence drops in an uncertain economic situation.

"The rest of the year seems unlikely to reverse this pattern of falling volumes, especially when considering the high demand at the end of 2021. In 2023, demand growth is not expected to be high enough to counter the effects of high fleet growth, leaving freight rates to continue to slide," said Xeneta.