With ultra-low container rates, multiple operators teetering on the brink of bankruptcy, and adversarial relationships developing between those shipping goods and the carriers, Xeneta believes the entire container industry must evolve. The Oslo-based benchmarking and market intelligence platform for containerised ocean freight is proposing a radical solution it says would benefit both shippers and carriers – the introduction of ‘commodity’ status.
Container rates have collapsed over the course of the last eighteen months. According to Xeneta, which tracks data across 60,000 global trade routes, short-term market average rates for the Shanghai to Rotterdam trade are typical. Here, the market average price for transporting a 40-foot container has fallen by 51 per cent since 1 July 2014, currently standing at US$1294. Some Qingdao – Rotterdam boxes have been obtained for as little as US$100 during the last year.
Xeneta CEO Patrik Berglund and the team working on the Xeneta platform see the commoditisation of containerised freight as a solution. Commodities are traded on highly regulated exchanges with transparent pricing. Importantly, traded items can be hedged, buying or selling forward to manage exposure to risk. For example, in the case of aluminium, traded on the London Metal Exchange (LME), it is possible to buy or sell forwards by up to 123 months.