Definition
The Contracted Within filter lets you exclude the freight rates of older long-term contracts from the Market Trends price calculation.
To measure global trends, Xeneta aggregates trade lane pricing by looking at both short-term and long-term contracts. When viewing freight rates as set by long-term contracts, the price on any trade lane for a single day may come from a combination of contracts made anywhere from a day ago to several months ago.
If you find that contracts from several months ago do not reflect the current market price, the Contracted Within filter provides you with three options for filtering contracts based on their age:
- Contracted Within – 3 Months will only display prices from valid contracts that began no more than 3 months before the current date.
- Contracted Within – 6 Months will only display prices from valid contracts that began no more than 6 months before the current date.
- Contracted Within – All will display all contracts that are valid on the current date.
Note: We recommend starting any pricing benchmark with the Contracted Within – 3 Months filter. Otherwise you may find some valid long-term contracts that began months ago — and no longer reflect the prices of the current day — may give you a distorted view of the market.
Example
In the diagram below, a search for rates has been performed on a trade lane, returning five contract rates. Each contract starts and ends at a different time, and each contract has a different freight rate associated with it.
If we set our Contracted Within filter to show all rates, the final price for today will be a combination of contracts 2, 3, 4, 5, and 6.
If we set our filter to show rates contracted within 6 months, the final price will be a combination of contracts 2, 3, 4, and 5.
Finally, if our filter is set to show rates contracted within 3 months, the final price will be a combination of contracts 3, 4, and 5.
Note: Contract 1 will not be factored into any calculation because it is not valid on today's date.
Note: In this example, we use only 6 contract rates for illustration purposes. In reality, Xeneta needs a minimum of 5 rate data points to show a benchmark rate for any date.
Standardization
One of the most important reasons behind the Contracted Within filter is standardization.
By allowing you to see rates based on the age of long-term contracts, you have more context from which to select the rates that are most relevant to you. Taking the current market position into account when benchmarking rates is vital to adopting an effective pricing strategy.