GlossaryEN1 min readUpdated: Jul 19, 2026
Contract Rate
Anyone shipping predictable volumes over months uses contract rates to hedge against market swings.
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Source: https://www.marineinsight.com/maritime-law/differences-and-correlation-between-spot-rates-and-contract-rates-in-shipping/
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Logistics Concept
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Definition & Explanation
Anyone shipping predictable volumes over months uses contract rates to hedge against market swings. A contract rate is a contractually agreed freight price between a shipper or freight forwarder and a carrier – in ocean freight typically the shipping line – valid for a fixed term, usually six to twelve months. It is often negotiated in a tender process and, in addition to the price, frequently includes volume commitments (minimum quantity commitments) and guaranteed space. The advantage: budget certainty and access to capacity even in peak periods. The disadvantage: if the market falls, the shipper pays above market level; if it rises sharply, some carriers temporarily prioritise more lucrative spot cargo. Many shippers therefore run a mixed strategy of contract and spot shares. Not to be confused with the spot rate, the current market price for individually booked short-term transports without contractual commitment.
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