June 29 - London-based shipping industry consultancy firm, Drewry and the World Container Index have published a White Paper that explains how index-linked contracts work, the first definitive guide on the subject since widespread adoption commenced two y
The White Paper, free to download from Drewry's website, examines the causes of recent container freight rate volatility and how index-linked contracts can help mitigate the impacts of such instability. It explains how these new contracting arrangements work with reference to current models in use and summarises the extent of industry adoption thus far.
The White Paper is a must-read for any organisation considering the use of index-linked contracts," says Drewry's freight rate research manager Martin Dixon. "It lifts the veil on a much misunderstood subject that has the potential to transform the way in which container shipping is contracted."
The White Paper explains that index-linked contracts bring other benefits, such as reduced shipper tender costs and carrier cost of sale.
Adoption is growing rapidly. In May, the US Federal Maritime Commission (FMC) confirmed that 61 index-linked contracts covering US trades had been filed with the organisation in 2012. Drewry estimates that around 50 index-linked contracts have been signed on the Asia-Europe trade so far this year.