The global XSI® posted its biggest ever month-on-month drop on record in Jan 2023. It fell by 13.3% from December, down to 364.15 points. This was its lowest level since April 2022 and a significant increase in the pace of decline since December, where it fell only by 0.1% m-o-m.
Compared to January 2022, the global XSI® is up by 52.7% and compared to January 2020, it is up by 316.4%.
The much bigger drop in January compared to December can be attributed to the larger number of older contracts expiring and new contracts entering validity.
All six of the XSI® sub-indexes fell month-on-month, half of which saw record-high falls.
Though carriers were able to protect their average long-term rates for many months despite the crash of the spot market, they've been unable to keep this up into the new year.
Shippers are well aware of market dynamics turning in their favor.
They pushed carriers for big savings compared to last year's long-term contracts, often forcing carriers to offer big discounts between bid rounds.
Overcapacity will loom over the market throughout 2023. Xeneta expects carriers' only hope will be removing enough capacity to match this year's lower demand.
The XSI® for European imports fell to 353.3 points in January, a 9.6 drop from December.
Compared to the start of 2022, the XSI® is still up by 40.9%.
The major trade into Europe from the Far East saw an even bigger month-on-month decline in the average of all valid long-term rates.
The average long-term rate from the Far East to North Europe fell by 17% from December, with those from the Far East to the Mediterranean down by 15%.
However, other trades into Europe included in the XSI® index saw smaller drops and even increases on some of the smaller trades.
The XSI® for European exports fell by 5.2%, down to 363.49 points. The m-o-m drop is not the largest on record, leaving the index up by 83.0% from January 2022.
The XSI® for exports out of the Far East had the largest m-o-m drop, falling by 18.1% to 456.86 points in January.
Compared to a year ago, it is up by 41.0%.
All underlying trades to this index posted m-o-m declines in their average long-term rate, with the biggest drops coming on trades to Europe and the Far East.
The average long-term rate from Japan to the US West Coast fell the most month-on-month, down by more than 60%.
As with the other regions, the sub-index, representing the smaller trade flow (in this case from Far East import), didn't post a record decline.
It fell by 3.2% to 207.59 points. This is 25.7% higher than in January 2022, making it the index with the smallest year-on-year increase.
The XSI® for US imports fell by 15.8% from December, down to 459.73 points.
It's the fastest m-o-m decline of this sub-index on record and the fourth month in a row in which it has fallen.
Many US importers will watch the XSI® index closely as they begin their tendering process. The big m-o-m drop will come as welcome news, but those signing new contracts starting in Q2 should expect even bigger savings on their long-term rates compared to last year's contracts. Last year when the XSI® was increasing, the biggest month-on-month increase was recorded in May (+65.1%).
Many of the contracts behind this increase will expire at the end of April and will be replaced by much lower rates, causing an even bigger decline in the XSI® than what we witnessed in January.
The XSI® for US exports was one of the two sub-indices that didn't register a record-high drop.
It fell by 1.3% from December, landing at 157.21 points in January 2023. The biggest month-on-month decline of this index dates back to April 2018.
