Drewry & the World Container Index arrange an educational webinar on 5th December 2012 to explain how Index-Linked Container Contracts work
The webinar will examine the causes of recent container freight rate volatility and how index-linked contracts can help mitigate the impacts of such instability. It will explain how these new contracting arrangements work with reference to current models in use and will summarise the extent of industry adoption thus far.
Persistent freight rate volatility is forcing container shipping to consider alternative forms of shipper-carrier contracting arrangements that enable the contract rate to vary relative to an external index.
“Freight rate volatility will continue to be a feature of container shipping for some time to come,” added Dixon. “How industry participants adapt to this change of circumstances will be fundamental to the future of container freight contracting and shipper-carrier relations.
Enabling the contract rate to vary relative to an external index serves to reduce any possible divergence between contract and spot rates, so addressing the drivers of contract default. Meanwhile, the resultant exposure to wider market volatility can be mitigated through the application of dampeners, floor and ceiling limits or hedging.
Adoption is growing rapidly with the continuing predominance of freight rate volatility. Drewry now estimates that over 100 index-linked contracts have been signed on the Asia-Europe trade so far this year and is expecting to see a significant rise in uptake on the transpacific trade in the upcoming 2012/13 contracting season.
To register for the webinar click here and follow the onsite links.