XENETA conducted a new long -term analysis that enters the authority in 2025, and data reveals a wonderful dynamic in negotiations between sellers and buyers to charge the oceans due to the constant uncertainty in the Red Sea.
Negotiation
The ceasefire in the Middle East has sparked hopes for the return of container ships to the Red Sea. If this happens, he may see that shipping rates are collapsing due to an increase in the capacity in the market caused by transport companies that take the shorter road through the Suez Canal, as well as the standard delivery operations for new ships.
On the other hand, the majority of the container ships are still sailing around the Cape of Good Hope and there is no guarantee that the situation will change in 2025. With the rates of site rates by 142 % from the Far East to the American East Coast, 100 % in northern Europe and 135 % in the sea Mediterranean, this represents a mystery for each of the tankers and trucks when agreeing to the “correct” price of the strike during long -term contract negotiations.
What are the new prices agreed upon?
When comparing the long -term decades that entered the authority on January 1, 2025 against those that were considered from January 1, 2024, prices increase in 7 out of 9 global Fronthaul trades listed in the 13th of XENETA.
For the purpose of this blog, we will focus on Fronthauls from the Far East to Europe and the United States, however Xeneta customers receive an exclusive report in all 13 higher global trading.
From the far east to northern Europe, long -term rates increased by 57 % compared to last year. From the Far East to the American East Coast and the American West Coast, new long -term rates increased by 44 % and 64 %, respectively.
In all of these deals, the new long -term rates are much lower than the average rate of current sites.
There is more for this story about shipping negotiation
If the long -term rates that enter the validity in 2025 are above 2024 but less than the high instant market, this seems to be a good compromise between the trucks and tankers?
Yes and no. When you dive deeper into the data, you see the dynamics of negotiation more interesting in playing.
First, let’s take a look at the risk of carrier to see the shipping rates collapsing if there is a return to the Red Sea. This means that they will enter negotiations looking to lock the trucks in prices as long as possible.
If you are a charger, you are worried about paying the possibilities to charge your goods if you are locked at a long -term rate and the markets decrease.
So, what happened during negotiations?
There is a clear difference in the prices provided by the long -term transport companies that last less than six months compared to contracts that last more than six months.
From the Far East to northern Europe, transport companies agreed to 28 % discounts if the trucks agreed to a contract of more than six months. From the Far East to the American East Coast and the American West Coast, the discounts were 13 % and 2 %, respectively (it should be noted that the two trucks are not in the tender season until this number rises).
This is a great dynamic negotiations between the seller and the buyer. On the one hand, you have the seller trying to stimulate long -term agreements to manage risk and protect the market share. On the other hand, you have the buyer to do everything possible to keep his options open for as long as possible with no more than necessary spending.
Data visions pay negotiations
What is clear from this data is that both sellers and buyers of shipping have an understanding of the market situation before entering the negotiations.
Some of the trucks may be happy to stand for more than six months if it protects their supply chains and denies the need for more negotiation in the event of another major global disturbance. Other trucks may choose the gambling on the ability to achieve a lesser rate within a few months and are happy to go to another tender round.
The result is largely dependent on tolerance with risks on each aspect of the table, but the introduction of negotiations without this data leaves you exposed.
This means understanding the long and short market, high and low in all types of commercial passages and equipment. This also means that the presence of the vision on the spread of prices provided by transport companies – within the common averages in this blog is a wide range of prices provided by various service providers.
This situation also shows the reason for the growth of the index -related contracts as it removes the need for more reinstalls when the shipping or decrease rates are high.
