Index-linked contracts – lots of positives, one potential flaw

Index-linked ocean container shipping contracts are increasing in popularity among shippers and freight forwarders. For some, it’s about maintaining control during extreme market volatility and heightened risk of opportunistic behavior. It is also a way to reduce the need for constant re-negotiations as markets rise or fall, allowing shippers/carriers to focus on dealing with whatever issues are actually causing market fluctuations.

The problem is, some indexes contain a potential flaw that could cost shippers millions of dollars a year.

The potential flaw

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