Spot shipping rates versus contract rates

Xeneta tracks data on both contract rates and spot rates. China-U.S. West Coast spot rates have been below contract rates since June 4, according to Peter Sand, Xeneta’s chief analyst.

As of Tuesday, Xeneta assessed average short-term rates on the China-West Coast route at $7,768 per FEU, 3% below average long-term rates of $7,981 per FEU.

Different indexes continue to post different price assessments (leading to some skepticism toward indexes). Unlike Drewry, Xeneta does not see a y/y drop in the spot rates yet. It still shows a y/y increase of 46.5%. But its data shows a 160% y/y increase in long-term rates, leading to a flip in the relationship between the two.

According to Sand, “What we’ve seen over the last year is strong growth for both sets of rates, but really spectacular gains for contracted agreements.

“That has led the gap between the two to diminish and, with supply chains bursting at the seams and shippers looking to manage risk as much as possible, the demand for spot deals has fallen slightly on this trade, bringing prices down.”

According to Xeneta, China-West Coast spot rates exceeded contract rates by a peak of $4,000 per FEU in September “before long-term rates hit overdrive and reeled in the difference. Long-term rates have stayed more or less stable since April, while spot rates have slowly fallen from their peak in March.”