The ocean freight rate benchmarking and market intelligence platform claims its new product will transform the way shippers, freight forwarders and carriers conduct freight rate negotiations, ensuring all stakeholders get the right price for their products and services, relationships are improved and complex, time-consuming negotiations become efficient.
“After several years working closely with cargo buyers and sellers, the one thing that is a clear pain point for many organizations is the inefficiency and opacity of contract negotiations,” explained Xeneta ceo Patrik Berglund.
“Freight rates are dynamic and prone to rapid change, so a shipper traditionally negotiating what they consider to be a fair rate for a long-term ocean freight contract can find that, three months later, they’re paying far in excess or below the actual market rates. This has the very real potential to make their products uncompetitive in the marketplace or risk supply chain disruptions.
“Similarly for carriers, when the market is low or high, they risk shippers taking their business somewhere else or not living up to their contracts as these are not enforceable. The current situation is not ideal for buyer or seller and neither one has the upper hand.”
XSI™ is a global ocean freight index with its foundations in Xeneta’s neutral database of over 65m contracted rates, covering over 160,000 port-to-port pairings, which is crowd-sourced from more than 700 leading international businesses, including power shippers such as Electrolux, Nestle, Unilever, ThyssenKrupp, Tata Steel and Continental.
It provides a real-time overview of the latest ocean freight rates. The new index allows stakeholders in the negotiating chain to tie rates to the market relieving them from frequent or periodic contract negotiations.
“XSI™ allows independent, verified and up-to –the-minute rates to be tracked over major shipping routes covering 57 corridors representing 95% of global intercontinental volumes, such as Asia-Europe, Europe-Asia, trans-Pacific, trans-Atlantic,” Berglund explained. “If all parties looking to sign a contract agree to use the index they can secure competitive rates over the long-term, building trust and reliable relationships with one another. What’s more they can save on all the resources, guess work and hassle associated with negotiating.
“We built Xeneta with the vision of making the shadowy world of rate fluctuations transparent. Our benchmarking and market intelligence subscription products enable the market to see what is possible with readily available freight data to optimize procurement. XSI™ goes one step further and gives forward-thinking freight procurement and supply chain professionals the power to take the next natural step and relieve their teams from negotiation cycles and instead focus on driving value and optimization throughout the entire supply chain. This means they’re not just benchmarking rates and running RFQs, but actually getting the real-time value that, until now, has remained elusive for many organizations.”
Competitor platform Freightos launched a container freight index last year and other established indices such as the Shanghai Containerised Freight Index have been around for many years.
While shippers have generally been quite receptive to the idea of linking contracts to floating indices, the lines in general have been less enthusiastic about losing control over their ability to set rates.
Among Xeneta’s several customers already running on the XSI™ is luxury furniture maker Ekornes which is using the XSI™ in partnership with global logistics leader DB Schenker. Under the deal, a monthly rate is created based on the latest freight data and an invoice generated on the last day of the month.
Ekornes executive project manager Stian Østrem said it is simple, efficient and fair. “The elimination of the tenders saves us internal resources costs and provides us with the possibility to allocate more full-time resources on supply chain optimization projects,” he comments. “We are able to improve our lead times and generate significant financial savings, compared to any short-lived procurement success through tender negotiations we had in the past.
“Xeneta, with its detailed market data and index solution, allowed us to establish a trustful relationship with our freight forwarder and focus on quality and delivery, which is the key value for our customers.”