1. Freightos launched an index linking toolkit for dynamic freight pricing. 2. The toolkit enhances contract management and reduces renegotiation frequency. 3. Index linking is gaining traction in containerized shipping and air cargo. 4. Freight rates can dynamically adjust with market fluctuations and reduce exposure. 5. The Freightos Baltic Index underpins this innovative pricing strategy.
The toolkit introduces efficiency, potentially boosting Freightos' market position akin to past tech innovations.
The article discusses significant advancements in Freightos' offerings, directly impacting their operational success and market relationships.
As index linking becomes standard, it may reshape market dynamics over time, similar to historical shifts in pricing models.
BARCELONA, Spain, Feb. 18, 2025 /PRNewswire/ -- Freightos (Nasdaq: CRGO), the world's leading digital freight booking and payment platform, today announced the launch of the Freightos Index Linking Toolkit in its Freightos Terminal market intelligence solution. This innovative toolkit enables dynamic contract pricing that automatically adjusts to market fluctuations, providing a seamless and resilient approach to freight rate management.
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. In this volatile environment, ocean freight index linking is becoming more essential than ever," said Anton Barr, VP Market Data at 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, the Freightos Air Index (FAX) for air cargo and Freightos Baltic Index (FBX) for container shipping.
Tali Aronsky
PR Lead, Freightos
press@freightos.com
SOURCE Freightos, Limited