GlossaryEN1 min readUpdated: Jun 24, 2026
Indexing Freight Rates
Unlike fixed-rate contracts, freight rate indexing ties the transport price to a pre-agreed reference index and recalibrates it automatically at defined intervals.
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Source: https://www.freightos.com/freight-resources/index-linked-freight-rates/
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Incoterms 2020 Simulator: Who bears costs & risk?
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Definition & Explanation
Unlike fixed-rate contracts, freight rate indexing ties the transport price to a pre-agreed reference index and recalibrates it automatically at defined intervals. Common benchmarks include diesel or bunker fuel indices and sector-specific cost indices. Shippers gain cost predictability through a known escalation mechanism; carriers and forwarders can recover increases in fuel, labour, or toll costs without renegotiating each contract individually. Indexation clauses are particularly prevalent in multi-year logistics agreements and on markets exposed to significant cost volatility. The choice of reference index is critical: a poorly matched index can systematically disadvantage one of the contracting parties.
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