The global XSI® continued its downward trend in March, though at a slower pace than in previous months, down by just 0.5% from February at 345.87 points.
Compared to the all-time high the global XSI® posted in August 2022, it is now down by 24%.
The small month-on-month decline largely reflects only a few new contracts entering validity in March.
The major tendering season in Europe has passed.
In the US, far more new contracts will start in April and particularly May, replacing last year's older and much more expensive contracts and undoubtedly bringing the XSI® down.
Compared to a year ago, the global XSI® is still up by 30.5%, but the situation has changed significantly for carriers and shippers.
On a global level, carriers still make good money on the containers they transport on long-term contracts.
The more exposed a carrier is to the long-term market, the better, as on a global level, these are far higher than what they are shipping for on the spot market.
However, it's difficult to see this lasting much into H2 2023, as new long-term contracts will bring the global XSI® down.
The sub-index for European imports fell by 6.0% between February and March, landing at 324.13 points.
This is the lowest level for the European imports index since March last year, but compared to then represents an 18.0% increase.
Unlike European imports, the index for European exports grew in March, although only marginally. The index for European exports is up by 0.8% to 351.57 points. This index is up by 62% compared to a year ago and is still almost three times higher than in March 2020.
The underlying trades to the European exports index indicate that those to the US, particularly into the US East Coast, increased, whereas backhaul trades, such as Europe to the Far East, fell. As per the timing of contracting in the US, we expect considerable drops in long-term rates into the region in May as new one-year contracts enter validity.
The XSI® for Far East exports registered its eighth month-on-month decline in a row. It fell to 407.17 points, down by 1.6% from February and its lowest level since April last year. Compared to a year ago, the index is up by 11%, making it one of the indices with the lowest year-on-year increase.
As with European exports, the sub-trades with the biggest increases are those into the US, with Southeast Asia to both the East and West Coasts twice as high now compared to March 2022.
The index for Far East imports fell by 188.77 points in March, down by 1.5% from February. Compared to a year ago, it is up by 7% and one of the few trades which hasn’t doubled from March 2020 (+85%). The removal of the zero-COVID policy in China has led to a recovery in economic activity in the country and the wider region. However, the real test will come after the easy gains have been achieved. Lower demand for Chinese exports will add more focus to the domestic economy, which has been underperforming since the start of the pandemic.
The XSI® sub-index for US imports posted a 7.1% month-on-month increase, making up for the two previous months of decline.
In March, this index stood at 458.37 points. The relatively few new long-term contracts on trades into the US are a major reason behind this seemingly counter-intuitive increase in the XSI®, given the prevailing market conditions.
But this month’s increase should not hide the fact that many new long-term contracts are getting ready to be signed with validity starting in May at much lower levels than last year and in recent months.
Looking back at last year, just before the XSI® for US imports jumped up between April and May (+65%), it fell between January and February. We may now be moving in the opposite direction. The XSI® for US exports is flat from February at 179.12 points. This is the lowest reading among the sub-index, i.e., the trade that has grown the least compared to the starting point in January 2017.
It is, however, also the only sub-index that remains at record high levels, with increases earlier this year, recovering the small losses experienced in 2022.
The current strength of the XSI® for US imports comes despite a 19% drop in imported volumes, wiping away the gains made since the pandemic.
On the other hand, after posting three straight years of declines, US exports started the year up 4% from 2022.
