Freightos® Introduces Index Linking for Freight Contracts, Bringing Global Trade to the Digital Age
Rhea-AI Summary
Freightos (CRGO) has launched the Freightos Index Linking Toolkit within its Terminal market intelligence solution, introducing dynamic contract pricing for freight rates. This innovative system automatically adjusts to market fluctuations, addressing common issues with fixed-price contracts such as renegotiations and cargo rolling.
The toolkit leverages the Freightos Baltic Index (FBX®) for container shipping and Freightos Air Index (FAX) for air cargo, both based on live transactional data. When combined with hedging via freight future agreements on the CME and SGX, this solution enables carriers, forwarders, and BCOs to reduce pricing exposure and improve efficiency.
Industry expert Bjorn Vang Jensen endorses the approach, noting that long-term stable rate contracts serve as effective hedges. The system aims to bring predictability to freight procurement while reducing the time spent on contract negotiations.
Positive
- Introduction of innovative dynamic pricing system that could reduce contract renegotiations
- Integration with major exchanges (CME, SGX) for hedging opportunities
- System based on comprehensive live transactional data through FBX® and FAX indexes
Negative
- None.
News Market Reaction 1 Alert
On the day this news was published, CRGO declined 4.36%, reflecting a moderate negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
Index-linking transforms how importers, exporters, freight forwarders and carriers manage stable, reliable and persistent freight contracts while saving time and avoiding excess charges. Already common in industries like bulk shipping, index-linking is rapidly gaining traction in containerized shipping and air cargo, signaling a pivotal shift in freight contract management. Freightos' toolkit represents its commitment to digital transformation, driving the industry forward by enabling adaptive pricing models that set a new standard for resilience and efficiency in global trade.
Freightos' research consistently shows that fixed-price contracts suffer from disadvantages like carriers renegotiating rates or rolling cargo when rates increase or importers and exporters renegotiating when rates drop. Index-linking dynamically aligns rates with the market, dramatically reducing contract renegotiations while ensuring competitive pricing and consistent service.
The index-linking is based on Freightos' industry leading indexes, the Freightos Baltic Index (FBX®), a BMR-compliant global container index based on billions of transactional data points, and the Freightos Air Index (FAX) for air cargo. Both are based on live, aggregate sources used for actual quoting and booking.
When combined with hedging via freight future agreements (FFAs) on the Chicago Mercantile Exchange (CME) and the Singapore Exchange (SGX), carriers, forwarders and BCOs can reduce freight pricing exposure and improve internal efficiency.
"When you plot all these gains and losses for either side against a stable rate...you'll actually find that a long-term stable rate contract is a near-perfect hedge," said Bjorn Vang Jensen, EVP Ocean at Easy Speed International Logistics. Van Jensen also has extensive shipper experience as Vice President of Global Logistics at Electrolux. "Shippers are always looking for better ways to procure freight, secure space, and, most importantly, bring some predictability to the process. Index-linked contracts do just that—they help both sides get a good deal while freeing up time and energy for more productive work. Instead of spending months in back-and-forth negotiations that eat up thousands of hours and rarely lead to anything lasting, index-linking offers a smarter, more efficient way forward."
"Logistics teams, already stretched thin, are now renegotiating freight contracts quarterly instead of annually due to ongoing disruptions s. In this volatile environment, ocean freight index linking is becoming more We're setting out to make this as accessible as possible with trusted indexes, sample legal clauses, index pricing toolkit and more."essential than ever," said Anton Barr, VP Market Data at Freightos.
About Freightos
Freightos® is the leading vendor-neutral global freight booking platform. Airlines, ocean carriers, thousands of freight forwarders, and well over ten thousand importers and exporters connect on Freightos, making world trade faster, more efficient and more resilient.
The Freightos platform digitizes the trillion dollar international freight industry, supported by a suite of software solutions that span pricing, quoting, booking, shipment management, and payments for global businesses of all shapes and sizes. Products include the Freightos Marketplace, WebCargo, WebCargo for Airlines, 7LFreight by WebCargo, Shipsta by Freightos, and Clearit.
Freightos is a leading provider of real-time industry data via Freightos Terminal, which includes the world's leading spot pricing indexes, Freightos Air Index (FAX) for air cargo and Freightos Baltic Index (FBX) for container shipping.
Media Contact
Tali Aronsky
PR Lead, Freightos
tali.aronsky@freightos.com
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SOURCE Freightos, Limited
FAQ
What is the new Freightos Index Linking Toolkit announced by CRGO?
How does CRGO's new index linking system benefit freight contracts?
What indexes does CRGO use for the new freight contract system?
How can CRGO's index linking be combined with hedging strategies?
What problem does CRGO's new Index Linking Toolkit solve?
