Xeneta has launched an index-linked contract (ILC) simulator to help shippers navigate ocean freight container market volatility and end procurement inefficiency.
The new ILC Simulator – now available in the Xeneta platform – allows shippers to compare traditional fixed-rate contracts with index-linked contracts using sample corridor data or their own historical ocean container freight rates.
Shippers and logistics services
The simulator is an important first step towards index-linked contracting, which is rising in prominence as shippers and logistics service providers try to prevent long-term agreements being torn up, or regularly renegotiated, in the wake of disruptions such as Covid-19, the Red Sea Crisis and US-China trade war.
Fabio Brocca, Xeneta Chief Product Officer, said: “Xeneta’s index-linked contract simulator is a major advancement for the container shipping industry. It offers the important first step towards realising a more efficient, data-driven freight procurement strategy that is built to withstand the realities of today’s geo-political and economic trade landscape."
Benefits of index-linked contracts
Xeneta is uniquely positioned to provide the depth, freshness and reliability of data
Brocca added: “Market volatility is causing contracts and supplier relationships to break down, bringing the inefficiencies of traditional RFQ tender processes into sharper focus."
"Shippers came to Xeneta asking for help and I am proud to be leading the charge towards a better way to buy and sell freight by launching this simulator and opening eyes to the benefits of index-linked contracts.”
Xeneta freight rates
Xeneta already provides data for hundreds of index-linked contracts, which ensure freight rates remain aligned to market movement. This allows shippers and providers to concentrate on service delivery and supply chain resilience as part of a long-term partnership.
As the pioneering neutral provider of ocean and air freight intelligence, Xeneta is uniquely positioned to provide the depth, freshness and reliability of data required to base a successful ILC against.
Xeneta platform
Xeneta platform calls upon more than 600 million contracted freight rates sourced from shippers
The Xeneta platform calls upon more than 600 million contracted freight rates sourced from shippers and freight forwarders across both long and short-term markets.
Brocca has advised ILCs risk failure if they are not based on the appropriate data for a shipper’s individual requirements. He said: “We have seen costly mistakes when shippers do not base their ILC on the right data, such as using a 20ft container index for pricing a 40ft container or not leveraging data across long and short term markets."
new Xeneta ILC simulator
Brocca added: “With the new Xeneta ILC simulator, customers can get started in a matter of minutes in understanding the intricacies of this new way of procuring freight so they can avoid costly errors and move forward to implementation with confidence."
“We understand this is a significant shift in the way many businesses procure freight, so it is important we provide guidance and best practices in creating ILCs, which will then also help with industry standardisation.”
