Indexing glossary

Key terms used across the indexing section, in plain language.

Index-linked contract. A freight contract whose rate adjusts in line with a chosen market index, instead of being fixed for the contract term.

Reference index. The market index a contract tracks, for example a Xeneta benchmark for a specific corridor. It should be neutral and agreed by both parties.

Adjustment frequency. How often the rate recalculates against the index during the contract, for example monthly or quarterly.

Calculation day. The day of the month a new rate takes effect.

Rate on day. A calculation method that uses the index value on the calculation day itself.

Average over period. A calculation method that uses the average index value across a defined window, smoothing out daily swings.

Period length. The window averaged when using average over period, for example the last month. It runs up to the calculation day.

Starting price. The initial base rate of a contract and the reference point for future adjustments. Best practice is to base it on recent history rather than a single day.

Discount or premium. How the contract rate sits relative to the index, below it (discount) or above it (premium).

Minimum adjustment trigger. A threshold the index must move before a rate change is applied, avoiding unnecessary small adjustments.

Guardrails (floor and ceiling). Lower and upper limits on the rate that protect both parties from extreme markets.

Short-term market adjustment. An optional mechanism to adjust when spot rates diverge sharply from the indexed rate.

Volume commitment. The cargo a shipper commits to move under the contract.

Spot rate. The current short-term market price for immediate shipment.

Long-term rate. The contracted market price over a longer term, the basis for most index-linked contracts.

FEU / TEU. Forty-foot and twenty-foot equivalent units, the standard container measures. One FEU is roughly two TEU.

Surcharge. A cost component added to the base ocean rate. Only those in Xeneta's standard methodology are part of the indexed rate.

THC / OTHC. Terminal Handling Charge and Origin Terminal Handling Charge, floating port charges. Usually outside the indexed rate, with a North America exception.

XSI. The Xeneta Shipping Index, Xeneta's benchmark of real market container freight rates.

XSI®-C. The Xeneta Shipping Index by Compass, the governed index that underpins exchange-traded container freight futures.

Futures contract. A standardised, exchange-traded agreement to buy or sell at a fixed price on a future date, used to manage price risk.

Hedging. Using a financial instrument such as a future to reduce uncertainty about a future cost or revenue.

Simulator. The Index-Linked Contract Simulator, used to model and test an indexed contract.

ICM. The Index Contract Manager, used to operate a live index-linked contract with automated rate updates.