Rates and contract validity

This article provides a brief introduction into how Xeneta views rates depending on the length or validity period of their associated contracts.

Validity and average rate

The way Xeneta handles rates associated with long-term contracts of different length can be presented as a graph where the length of each line indicates the validity period of a contracted rate, while its vertical position indicates the negotiated amount in USD.

Xeneta creates a market rate benchmark by calculating the average value for all rates that are valid on a single day. In the example above, the arithmetic average of the five rates on the graph that pass through the blue dashed line will be $300.

This is the most basic scenario of how Xeneta presents rates from across the market as a single value that we use for benchmarking.

Validity period and contract age

By default, Xeneta combines all contracted rates that are valid on a given day into a single average rate.

This includes contracts that were negotiated in the past, as well as those that have started recently. This means that long-term contracts from several months ago will influence the benchmark rate that we show in the platform.

If you're primarily interested in the most current freight rates available on the market, you can choose to exclude older long-term contracts by using the Last 3 months or Last 6 months options available when selecting the Contract length metric:

This allows you to only see the rates that have been contracted recently.

In this example, if we calculate the market average only for those contracts that start within the scope of the Last 3 months option (within the area highlighted in pink), we'll find that the average market rate is actually $350:

In this specific case, looking only at newer contracts allows us to conclude that the market is moving towards a higher average rate.

📘

Xeneta can also look at contracts that are valid beyond the current day or are contracted to start at some point in the future. To learn more, see Future rates.