Index-linked contracts are not a new concept, in fact the practice of adjusting contracts in line with inflation or commodity prices has been in place all over the world for centuries. Today, indexation is standard in many industries, including finance, construction, real estate, and government procurement, where contracts need to account for market volatility and inflation.

The Ocean freight industry has long struggled with price volatility, supply and demand shifts, and unpredictable macro-economic influences that lead to contracts breaking down. For shippers and logistics providers alike, having access to real-time, neutral freight intelligence is essential for procurement, logistics and finance leaders responsible for forecasting, budgeting, and negotiating tenders.

In this example, the index-linked contract moves with the market average , whereas there are large time periods with significant gaps on the RFQ (fixed-rate contract).

­ For this corridor, you can see how the 12-month fixed-rate contract can become misaligned with actual market conditions, creating periods where shippers either significantly overpay (as seen in late 2022 when annual rates remained high while market rates plummeted), or significantly underpay (as seen in early 2021 when rates were locked in before the market surged), risking additional renegotiation and surcharges, or containers being rolled. In contrast, the index-linked contract adjusts at regular intervals reflecting changing market conditions, as evidenced by its stepped pattern that more closely follows the market.