The future of ocean freight pricing – A note from Xeneta’s CEO
Patrik Berglund CEO & Co-founder, Xeneta
When we founded Xeneta 13 years ago, our aim was to address three significant challenges in the buying and selling of ocean freight: volatility, lack of transparency, and inefficiencies in the tender process. While we didn’t have a crystal ball to foresee disruptions such as the crisis in the Red Sea, or the Covid-19 pandemic, these challenges remain as real today as they were when we envisioned transforming the way ocean and air freight is bought and sold.
Since we started this journey, we’ve welcomed thousands of professionals from all over the world to our Xeneta community of shippers and logistics providers.
We provide our customers with year-round visibility into freight market dynamics and the tools and expertise to make forecasting, budgeting and tendering more data-driven and efficient. Today, access to a platform like Xeneta has become a necessity for procurement and supply chain leaders.
However, in the last five particularly volatile years, we’ve seen shippers and logistic providers spend months tendering only to have the 12-month contract they’ve painstakingly agreed be invalidated when the market shifts, sending them back to the negotiation table. We saw this when Covid caused rate spikes of over 600%, when the Red Sea crisis caused rates to spike over 400%, and when the market fell again.
To combat this, we’ve seen more customers move to use Xeneta data for index-linked contracting and currently have hundreds of index-linked contracts based on our data. Demand is increasing from both logistics service providers and shippers, and while we will continue to support our customers to buy and sell freight in whichever way best suits their organizations, we believe this is where the market is heading in the long term. All parties will benefit from a more efficient way of buying and selling freight that allows for more focus on service, and long-term partnership health.
Today, Xeneta supports our existing and new customers in understanding and simulating index-linked contracts with our data and tools. Later this year we will launch our in-platform contract manager for Xeneta based index-linked contracts. I envision a further step will be derivative contracts so market participants can lock in their prices and achieve price security, whether they prefer to buy / sell ocean freight on the spot market, with traditional fixed-rate contracts, or with index-linked contracts.
We’ve put this guide together to help shippers and logistics service providers explore the key components and best practices we’ve learned for implementing Index-linked contracts and how they can transform ocean shipping for the better, for all parties. We hope you find it a useful resource on your indexing journey.
