Xeneta customers abandoning long-term contracts

Zero percent of Xeneta customers would be staying with their current long-term contracts - an emboldening time for buyers in the freight market.

Clear downward trends and "ones to watch" include Asia–U.S, Asia–E.U. and E.U.–U.S, according to a recent webinar hosted by Patrik Berglund, CEO and Co-Founder, Xeneta and Michael Braun, VP, Customer Solutions, Xeneta.

"While 55 percent of customers are pushing through with a scheduled RFQ to get new rates, 31 percent of customers are now negotiating upcoming contracts in 2023 for one year, as usual and 46 percent of customers are considering sustainability in their procurement strategies for 2023 on an informative basis."

Berglund and Braun emphasised the pressure the other respondents are putting on sellers with a portion negotiating now for only 3-6 months or for up to one year but with index-based adjustments, the update added. "The customer consensus reveals that shippers are still trying to materialise savings as soon as possible and are now having more influence to do so."

As many as 46 percent of customers polled are planning to incorporate sustainability in their procurement process exclusively on an informative basis, the update said.

XSI drops for 4th month
The global Xeneta Shipping Index (XSI) fell to 419.8 in December, down by just 0.1 percent from November. The pace of decline has slowed since November when the XSI fell by 5.7 percent month-on-month.

This is now the fourth month in a row that long-term ocean freight rates have declined but despite this negative trend, the XSI remains 70 percent up year-on-year after a strong start to 2022.

"The narrative for the beginning of 2023 looks to be very different," says Berglund.

"As more and more long-term contracts expire in the new year, expect the XSI to post far greater month-on-month declines. 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 currently far lower spot rate benchmarks."