SIMIC

IMPORT demand in the US and Europe has fallen steadily since the summer, with market indicators all pointing to continued weakness into 2023, says Xeneta¡¯s CEO Patrik Berglund, reports IHS Media.
"As more and more long-term contracts expire in the new year, all indicators point towards considerable rate drops from today¡¯s levels, with several of the major Far East trades pointing towards new long-term contracts that are much closer to the far lower spot rate benchmarks," said Mr Berglund, the head of the rate benchmarking platform.
Through the fourth quarter, Asia-US west coast long-term rates have fallen 14 per cent and are currently at US$6,350 per FEU, an incredible $5,129 per FEU above the spot market, Xeneta data shows.
On the Asia-US east coast route, the average long-term rate has dropped 11 per cent through Q4 and currently sits at $8,154 per FEU, $5,424 per FEU above the spot rate.
Asia-North Europe long-term rates have fallen 20 per cent since the end of September and at $4,139/TEU are almost $3,000/TEU higher than the current spot market.
This huge difference was highlighted by James Hookham, director of the Global Shippers' Forum, who said the widening gap was angering cargo owners and required a "flexible and immediate response" from carriers.
However, it appears that response is being driven instead by a market that is correcting the anomaly of long-term rates stuck far above spot prices.
"When we do see contracts being signed, across all trades, we¡¯re seeing them agreed below the current average for all valid rates," Mr Berglund said. "The fundamentals look weak for the immediate future and the spot rates have cleared a path for long-term rates to head south."