(Note: To learn about how to display future rates, please visit the help article here)
What Are Futures?
Future rates are simply a view of the valid rate prices contained in our database that extend into the future. When Xeneta collects prices from clients after their tendering process, these contracts can sometimes have a starting date within the future, rather than the past or relatively near-present time. Once these prices are entered into Xeneta's database and aggregated into rates for benchmarking, the past and present rates are displayed in search results, and the future rates are available for the next three months from today's date by using the "Show Futures" feature.
There is no speculation involved with futures; they are merely a view of current contracts that have validity periods extending into the future.
Future rates are displayed for up to three months into the future.
While the future rates we have may extend beyond the three-month field of view, there isn’t necessarily a reason to visualize them on the graph.
If the displayed rates have been contracted within three months and three months of futures are displayed, it can be assumed that the rate could be valid for at least an additional six months (3+3+6 = 12-month contract).
Contracts Starting in the Future
In the case where we know a contract will begin in the next three months, there’s strategic value in knowing that the price reflects the recent market.
If “contracted within three months” is selected, we know the contract was initiated within the past three months, and you can then adjust your pricing strategy accordingly knowing that this price reflects recent market circumstances of the past three months.
In the example image above, the colored lines represent contracts for different container types contained within Xeneta's database. Each line (contract) has a start and end date. We can assume that today's date is somewhere around March 2018 and we're searching for historical data.
As shown, there's a substantial amount of contracts available for past and present rates. However, if you were to zoom in on this graph to display a much higher resolution (example image below), you would see that specific rates are actually beginning after today, so they are not considered in today's benchmark calculations. Using the "Show Futures" button would display these rates that will become valid within the next three months.
How is this the Best Possible View of the Future Market?
To put it simply, knowing the price points at which future rates have been negotiated at, you can set a baseline for yourself before or during the tendering process by knowing the rates that others have negotiated with their suppliers.
Even more simply put, a future rate beginning two months from now will be calculated into "today's rate" three months from now or even longer, depending on the length of the contract. By analyzing these future rates, you'll have a more transparent window of insight into what the market benchmarks will be within the coming year.