With the continuous fluctuation in the spot market recently, regular renegotiations can be cost and time deficient. This is where Index Linked Container Contracts (ILCCs) are advantageous to shippers. Instead of having a fixed rate contract that needs to be renegotiated periodically, ILCCs can be automatically adjusted based on the set index.
During the customer webinar last week, hosts Peter Sand, Chief Analyst and Stanley Aizenstark, VP of XSI®-C and Indices at Xeneta, expanded on the Xeneta Shipping Index (XSI®) process and how this can be best utilized in the current state of the market. The webinar also revealed that 76% of customers recognize the value of ILCCs and want to procure capacity in the future using ILCCs.
This customer webinar was a special edition featuring XSI® indexing and how it compares to other lane analysis and providers.
Key Highlights | Xeneta Customers Say
- 75% of customers did not procure any capacity via Index-Linked Container Contracts
- 76% of customers would like to procure more capacity via Index-Linked Container Contracts
- Only 9% of customers' cargo is being rolled due to the anticipated blank on 50% of scheduled sailings from carriers
When asked how much customers currently used ILCCs to procure capacity:
- 76% of Xeneta customers said they use ILCCs to procure 0% of their freight
- 12% of Xeneta customers said they use ILCCs to procure up to 25% of their freight
- 6% of Xeneta customers said they use ILCCs to procure up to 50-75% of their freight
- 6% of Xeneta customers said they use ILCCs to procure more than 75% of their freight
While most customers polled don’t currently take advantage of Xeneta’s XSI® indexes or use ILCCs in negotiations, they are still relying on freight rate data in regular renegotiations, likely on the spot market.
When explaining the value of the XSI® indexes, Stanley Aizenstark, VP of XSI®-C and Indices, asked his audience what percentage of capacity they want to procure using ILCCs in the future. According to the consensus:
- 24% of Xeneta customers don’t want to procure any capacity via ILCCs
- 36% of Xeneta customers want to procure 25-36% of capacity via ILCCs
- 20% of Xeneta customers want to procure 25-50% of capacity via ILCCs
- 8% of Xeneta customers want to procure 50-75% of capacity via ILCCs
- 12% of Xeneta customers want to procure more than 75% of capacity via ILCCs
Xeneta XSI® indexes publish over 30 customizable global trade lanes with consistent historical data coverage. With recent easing congestion improving schedule reliability and freeing up capacity and containership charter rates in free fall – will XSI® indexes be an integral part of preparing for the tender season?
In response to the prediction that carriers are anticipated to blank 50% of all scheduled sailing from far East Asia to North America, Chief Analyst Peter Sand asked Xeneta customers how they expect this to impact them.
When asked if carriers blanking 50% of all scheduled sailings would impact them:
- 26% of Xeneta customers said they would not be affected at all
- 9% of Xeneta customers said the entirety of their cargo is being rolled
- 43% of Xeneta customers anticipate some disruption but no major issue
- 22% of Xeneta customers expect this will disrupt their supply chain significantly
Want To Learn More?
Xeneta customers get access to monthly market commentary during the Ocean Freight Market Pulse Webinars. Learn more about the Xeneta platform and how to become a customer now.