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Weekly Container Freight Update Week 13, 2023 | Southeast Asia to China trade becomes cheapest as Intra-Asia long-term rates spread widens

A higher-level perspective of China's standing as the least expensive source of imports from Southeast Asia offers insight into changes in the region over the past few years. 

Xeneta Container Freight Rate Update

This week's update will focus on the trade between Southeast Asia and the Far East as we start to explore the factors that are influencing intra-Asian volume and container rates.

Do geopolitical ties and world events have an impact on regional trade? Let's take a look at a few rate trends that appear to be suggesting that "friendshoring" is occurring in the area. 

WRU blog - week 13-1

The long-term contract average rate from Southeast Asia into the Far East has declined. Since the start of the year, long-term contract (signed in the past 3 months) average rates have fallen by 12.8% to USD 850 FEU (March 21). This is the first time since October 2021 where rates have fallen below USD 900. They peaked at USD 1 550 in August 2022. 

The sub-trades had similar long-term rate levels before the pandemic, however, the spread in rates has considerably widened in recent years. The sub-trades from Southeast Asia to China are currently the least expensive, while the sub-trades from the Southeast to Japan and Taiwan are now the most expensive. The difference in price between Southeast Asia - China and Southeast Asia - Japan was USD 375 per FEU. Japan reports the highest rate at USD 1 100 per FEU.

The fact that there is no longer a significant difference between contract and spot rates on the Southeast Asia to Far East trade is another intriguing point to note.

Shippers have been paying more for long-term contracts than spot for the last six months, but Xeneta data clearly shows that long-term prices are catching up. Shippers paid an average of USD 250 per FEU (25%) more for a long-term contract than for a spot rate on January 1, 2023. On March 21st, the premium was down to USD 10.

Long-term rates into China and South Korea are still higher than spot prices when comparing the Far East sub-trades, although long-term rates into Japan and Taiwan are more expensive. The difference between the long-term and spot rates between Southeast Asia and Taiwan is USD 170. 

One of the reasons for the decline in rates into China is the manner carriers have chosen to handle problems caused by pandemic restrictions and congestion. Because of China's vastness, carriers frequently preferred calling there to avoid further delays, which led them to offer lower prices. 

China's trade patterns provide an intriguing window into the political and economic landscape of the nation. A higher-level perspective of China's standing as the least expensive source of imports from Southeast Asia offers insight into changes in the region over the past few years. 

Keep an eye out for updates from Xeneta as we will spotlight other specific trades in the upcoming weeks to demonstrate how companies in the West seek out alternative "friends" to strengthen their supply chains.  

Note: 

The 'Weekly Container Rates Update' blog analysis is derived directly from the Xeneta platform. In some instances, it may diverge from the public rates available on the XSI ®-C (Xeneta Shipping Index by Compass, xsi.xeneta.com. Both indices are based on the same Xeneta data set and data quality procedures; however, they differ in their aggregation methodologies.

  • Xeneta Platform Methodology here

  • XSI ®-C Methodology here

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