Understanding trends in spot rates versus long-term averages is crucial for shippers while negotiating contracts: Analysis

On the surface, softening spot rates may feel like a welcome relief for shippers, but if you look a little deeper, the picture becomes more complicated. Phil Hennessey, Director of External Communications, and Shubham Bhattacharya, Lead Product Manager, recently hosted a webinar to dive into this uncertain market and explore how spot and long-term rates are shifting. Xeneta elaborates: What is the risk of holding spot rates? Markets have been trending downwards since January this year, with rates from the Far East down 51% into the US East Coast, 44% into the US West Coast, 50% into North Europe, and 44% into the Mediterranean.

Transatlantic rates are also down 19%, contributing to a significant decrease across the board so far in 2025. However, if you shift your perspective to look at the wider picture, you could easily argue that rates remain elevated. And that’s true when comparing rates today to rates in December 2023, just before the escalation of the Red Sea Crisis. Compared to then, rates from the Far East are still up 56% into the US East Coast, 74% into US West Coast, 59% into North Europe, and 66% into the Mediterranean – with transatlantic rates up 59%. To understand how rates are shifting, and how they might shift in the future, you can’t look at them in isolation.

It’s crucial to zoom out and look at trends over a long period of time to achieve a rounded view of what the spot market is doing, and what it might do next. Time to market – and understanding trends in spot rates versus long-term averages – is crucial for shippers as you negotiate contracts. As an example, we can look at the difference between spot rates and long-term rate averages from Vietnam to Los Angeles from April 2024 to April 2025. At one point, while the spot rate was spiralling at the height of the Red Sea crisis, the difference between the spot rate and long-term average was $5,556. At another point, the beginning of President Trump’s second term in office, the difference was $2,038.

And at the third point, the difference was $382. Shippers would be in very different positions negotiating contracts at these different points. But by timing your negotiations and demonstrating a clear understanding of market sentiment, you can present a data-backed argument to every conversation. While it can be encouraging to see rates currently trending down, that very rarely translates to all fees. Tariffs, of course, play a huge role, but so do port fees. For example, today we’re seeing an increase in port fees – specifically, for Chinese carriers and ships calling at US ports. Following scrutiny, these fees will no longer be applied at every port call and will be based on the size of ships.

While non-Chinese carriers might have an advantage if there are specific restrictions targeting Chinese entities, the relationship between non-Chinese carriers and China’s dominance in global trade is complex. For example, while non-Chinese carriers may benefit from some aspects, they also rely on Chinese ports for a significant portion of their shipping volumes. Any disruption in these ports can have a ripple effect across the entire industry, including non-Chinese carriers. Shippers, and even consumers, will also likely absorb some of the impact when the new fees take effect in October 2025. As we know, Chinese carriers are expected to face significantly higher costs, with additional increases projected over the following years.

This could lead to surcharges being passed on to shippers. However, even shippers who feel unaffected by these recent port fees should stay alert, as carriers may opt to reroute ships to bypass these fees. In such cases, the added costs of less efficient routes and operations could be passed down to shippers as well. To prepare, it’s crucial for shippers to keep a close eye on port-level data (as provided by Xeneta), and to review the terms and conditions they have with carriers and suppliers so they can understand how these costs may be absorbed or passed on to their organisation. Source: Exim News Service: Oslo, May 18

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