News / Air and sea shippers weigh pros and cons of index-linked agreements

06/11/2023

Uncertainty on freight rates for the next year is concerning both shippers and carriers as they consider committing to 12-month contracts – both in air and sea.

One way of reducing risk is through index-linked agreements (ILAs) – but carriers have concerns that rates could fall ...

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Matthew Gore
November 06, 2023 at 2:54 pm
In light of where the market currently is, carriers will be hoping for some improvement, however small, over the course of 2024-25. As most ILA mechanisms have some lag with the adjustment of their freight rates, this will defer any increase shippers face. Certainty of securing space is another advantage of ILAs as against fixed contract rates which later get overtaken by the spot market. The jury is out on whether that may happen in the next 12-15 months.

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