Container freight rates under long-term contracts increased to a record 28.1% in July

Long-term contract container freight rates jumped 28.1 percent in July, the biggest monthly increase ever, according to Xeneta.

container-freight-rates

Container freight rates under long-term contracts increased dramatically in July (Photo: Phaata)

Xeneta's latest public long-term freight rate index, XSI, rose 28.1% in July, by far the index's biggest monthly gain. The previous highest monthly gain was 11.3% in May of this year. The index is up 76.4% this year and July's figure is 78.2% higher than in the same period a year ago.

“This is a truly breath-taking development,” commented Patrik Berglund, CEO of Xeneta. "We’ve seen a combination of high demand, under capacity and supply chain disruption (in part down to Covid and port congestion) driving rates ever higher this year, but nobody could have anticipated a hike of this magnitude. The industry is in overdrive".

The sharp increase in long-term freight rates has followed the short-term spot container rates, even more strongly. For European imports, short-term freight rates increased sharply by 49.1% in July, to more than 13,000 USD/FEU for all goods (FAK), and increased by 120.3% over the same period last year.

As for Asia, freight rates for exports on XSI rose 24.2% in July and 110.4% year-on-year. As for the freight rates for US imports, July saw a 17.7% increase in short-term rates, and a 61.2% increase over July last year.

Berglund says shippers report shipping lines have sharply increased rates on long-term contracts. “However, bear in mind that volume flexibility is totally gone, with shippers committing to maximum quantities to secure positions onboard. Furthermore, all around the world, but especially in the US, shippers are playing safe and building buffer agreements to ensure they’re covered for the holiday season.”

See more: