Ocean carriers hold contract rates 'at a decent level', as spots tumble
While spot rates across the major deepsea trades have been on the decline since the turn of the year, long-term contract rates appear to be heading in the other direction, according to new analysis from freight rates benchmarking platform Xeneta.
It found that contract rates on the Asia-Europe trade recorded on its platform on 1 January were 57% higher than at the same point the year before.
While spot rates are heading towards worrying territory for carriers, anecdotal evidence suggests that, in contract rate negotiations, carriers have managed to maintain pricing discipline.
“Despite the spot rate drops, long-term rates have maintained at a decent level,” Zencargo’s VP of global ocean freight, Anne-Sophie Fribourg told.
“2025 long-term rates on the Asia-Europe trades are being agreed at quite light levels,” she added.
And it would appear that the falling spot rates, in combination with continued geopolitical uncertainty, has led shippers to be far more tentative in the tender process, with forwarders reporting that many Asia-Europe shippers are only launching annual tenders “now that Chinese New Year is out of the way”.
Traditionally, Asia-Europe annual contracts ran from January to December, but many were delayed last year when low spot rate levels in early 2024 saw many contract rate negotiations extended by several months.
According to Xeneta data, while spot rates have continued to slide in the first months of the year, from a peak in the autumn, carriers have, understandably, attempted to capture greater volumes under contract, and are offering big discounts – said to be as much as 28% on Asia-North Europe, provided “shippers agreed to a contract greater than six months”.
“This is a fascinating negotiating dynamic between the seller and buyer,” writes Xeneta analyst Emily Stausboll.
“On the one hand, you have the seller trying to incentivise longer-term agreements to manage risk and protect market share. On the other, you have the buyer doing everything possible to keep their options open for as long as possible while not spending more than necessary,” she adds.
The situation is similar on the Asia-North America trades, where Xeneta reports 1 January contract rate levels were 64% up year on year into west coast ports, and 44% up on shipments to the east coast. Ms Stausboll notes that, although the transpacific trades are still warming up for their annual rate negotiations, ‘early bird’ discounts are already being made available.
“From the Far East to US east coast and west coast, the discounts [on six month-plus contracts] were 13% and 2% respectively – it should be noted that US shippers aren’t as far into tender season, so this figure could rise,” she says.
