Xeneta Customers Say: 78% Accept Increase to Bunker Formula for Q3 Within Existing Contracts

The increase in fuel prices globally has sent ripples through the supply chain. With an increase in the Bunker Adjustment Factor or BAF, the cost for shippers has also risen. However, most Xeneta customers say they have accepted this increase for Q3 while staying in the same contracts.

In the latest 2022 edition of our customer-exclusive Ocean Freight Pulse webinar, Xeneta VP of Strategic Alliance Thorsten Diephaus and Chief Analyst Peter Sand asked Xeneta customers about their bunker formulas and expected volumes for the remainder of 2022.

Here are the key results from this interesting conversation: 

Key Highlights | Xeneta Customers Say

• 38% of customers expect ocean freight volume to decrease by approximately 5% 
• 78% of customers stayed with the original bunker formula, accepting the increase for Q3 
• 52% of customers re-negotiated prices, although their contracts are still valid 

In response to the mainstream media's narrative of significantly decreasing volumes (by up to 15%), Chief Analyst Peter Sand debunked the myth for the rest of 2022 as these headlines are usually not based on data or a real set of assumptions. 

When asked if customers renegotiated their prices while their contracts are still valid: 

When asked about their confidence in ocean freight volume stability: 

• 38% of Xeneta customers expected ocean freight volumes to decrease by approximately 5% 
• 32% said they expect ocean freight volumes to be stable for the remainder of 2022 
• 18% of customers said they expect ocean freight volumes to increase by approximately 5%  
• 10% expect volumes to decrease by approximately 15 %. 

In the June 2022 webinar, 54% of customers anticipated a decrease in volume in the coming months, consistent with recession predictions. Comparing the past customer consensus to these results – the market is in line with these predictions, showing signs of stability and with any decline leveling off. 

When asked how customers are handling the bunker increase for Q3:   

• 78% of Xeneta customers said they stuck to their original Bunker formula, accepting the increase for Q3   

• 17% were able to renegotiate successfully  
• The remaining 5% of customers said they attempted renegotiation without success.  

This sentiment gives better insight into how Xeneta customers are handling not just the bunker increase and rising fuel costs but also their strategy for the rest of the year.

With the overwhelming majority (78%) staying consistent with previously negotiated rates, could this be another hint at stabilization for the market? 

Impact on bunker pricing and rising cost for shippers to continue due to US/EU port congestion, trucker strikes and Covid outbreaks within China.  While crude oil prices seem to stabilize, for now, will bunker prices soon be taking back their place as one of the most disruptive issues for the remainder of the year? 

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