How a global industrial manufacturer ended the renegotiation cycle and locked in $100M in annual savings

Constant renegotiation consuming capacity and masking exposure

A large global industrial manufacturer moves approximately 100,000 TEU annually across six major trade regions. Ocean freight is strategically critical to their operations, supported by carrier relationships built over decades.

For years, multi-year contracts with annual rate adjustments gave Finance the predictability it needed and the business the stability it valued. Then COVID hit. Ocean freight rates surged by up to 300%. Even the strongest carrier relationships could not hold the line. Cargo moved — but at prices far beyond any budget.

When the company's Head of Freight Procurement joined in late 2022, the mandate was clear: get rates back to market levels, and restore stability.

The Approach

$100M renegotiated — and a pattern that changed everything

The team spent 2023 doing exactly that. Trade by trade, carrier by carrier, with market data from Xeneta as the negotiating foundation. Rates that had reached $8,000–$12,000 were renegotiated back to market-aligned levels. By the time the work was done, annualised savings exceeded $100 million.

Inside that year of renegotiation was a pattern that was hard to ignore. Every ad hoc rate adjustment was a manual attempt to track the market — generating significant non-value-added work: filing new rates, notifying Finance, updating auditors, catching errors, explaining changes to management. Every hour spent in that cycle was an hour not spent on structural improvements that deliver permanent value.

Rather than presenting indexing as something new, the team showed the numbers: here is where your rate was, here is where the market went, here is where your rate caught up. The business was already, in practice, living inside an indexed contract.

Formalising the arrangement would add structure, speed, and transparency — without changing anything already happening in practice. Finance's primary concern was volatility, so the team selected Xeneta's long-term index, agreed ceilings and floors with carriers, and built in a 10% quarterly threshold: rate changes below that level, in either direction, trigger no adjustment. Market alignment for the business. Stability for Finance. Quarterly rate management cycles, eliminated.

The Shift

Indexing the entire portfolio — all at once

With internal alignment secured, the company moved to index its entire ocean freight portfolio. The decision was not incremental: rather than piloting a single trade lane, the team committed fully — every carrier, every trade, converted to index-linked terms in one coordinated move.

Three-year contracts with rollover options replaced the annual renegotiation cycle. The Xeneta long-term index set the baseline. Carrier-agreed ceilings and floors provided the boundaries within which rates could move. The 10% quarterly threshold meant that minor market fluctuations passed through without triggering any adjustment at all.

For Finance, the model delivered the predictability that annual fixed contracts had always promised but rarely delivered. For the procurement team, it delivered something more valuable: time.

Carrier relationships did not suffer. Indexed contracts create a shared reference point that both sides trust — and that trust changes the nature of every conversation. Flexibility given within a transparent framework is not a concession. It is leverage earned for the future.

Results

A model that absorbs volatility — and frees teams for work that compounds

Carrier rationalisation Consolidated volume behind fewer partners to increase leverage and simplify contract management — work that had been impossible to prioritise during the renegotiation cycle.

Modal optimisation Identified air freight shipments that could shift to ocean without affecting production schedules — a measurable reduction in air spend across several trade lanes.

Supply chain resilience Mapped single-source dependencies, modelled alternative routing scenarios, and established pre-approved contingency carriers on high-criticality lanes.

Sustainability Built a framework for measuring and reducing carbon intensity across the ocean portfolio — positioning the business ahead of compliance timelines, not behind them.

What Comes Next

Building further layers of risk management

With the core indexing model in place, the team is now exploring hedging as a potential next step. Their exposure spans every major geopolitical risk region. Layering hedging on top of index-linked contracts would add a further dimension of risk management — and potentially new leverage in carrier negotiations.