SIMIC

XENETA Shipping Index (XSI) has revealed a concerning trend as global long-term shipping rates hit a two-year low in July, reports New York's Marine Link.

Rates fell 9.5 per cent since June and an alarming 57.8 per cent since the same period in 2022.



The situation for carriers is further worsened by the surge in new ship deliveries in June, which reached a record high with over 300,000 TEU of capacity from 40 new ships added to the market.



In the first half of 2023 alone, 990,000 TEU was delivered, and a similar amount is expected in the second half of the year.



With low demand being the underlying factor affecting rates, carriers hoping for increased volumes during the peak season in July and beyond may be in for disappointment.



Market analyst Emily Stausboll from Xeneta warns that overcapacity is inevitable due to the sheer number of new ships delivered this year, leading to a widespread impact on the industry.



The July figures for shipping rates were gloomy across the board. The XSI for Far East exports dropped 2.7 per cent, the lowest since April 2021, and a significant 69.5 per cent decrease from the same month last year.



European imports saw a decline of 12 per cent from the previous month, resulting in a 52.7 per cent drop since the beginning of the year.



While the XSI for US imports fell slightly by 2.9 per cent, it remains the only index above 200, still twice as expensive as the average rate in January 2017.



On top of the challenges with shipping rates, the industry faced labour relations disruptions.



Averted strikes at US west coast ports were replaced by a new issue when the Canadian chapter of the ILWU went on strike in July.



The strike impacted imports through the ports of Prince Rupert and Vancouver, affecting a significant portion of the US market.