A fixed-rate ocean freight contract does not guarantee what you will pay. Carriers can and do apply General Rate Increases (GRIs), Peak Season Surcharges (PSS), Emergency Bunker Surcharges, and other add-ons on top of the agreed base rate, often with minimal notice. A contract priced at $2,000 per FEU can become $3,000 or more by the time all surcharges are applied.
What 'Fixed Rate' Actually Means in Ocean Freight
In most annual service contracts, the carrier agrees to a base ocean freight rate. That rate covers the cost of moving your container from port A to port B. What it does not cover is the growing list of surcharges carriers impose when market conditions change.
Common surcharges that appear on top of fixed-rate contracts:
General Rate Increase (GRI): A blanket rate adjustment carriers apply when they determine the market supports higher pricing. GRIs can be announced and implemented within days.
Peak Season Surcharge (PSS): Applied during high-demand periods, typically Q3. A fixed-rate contract negotiated in Q1 rarely accounts for the PSS that arrives in July.
Emergency Bunker Surcharge (EBS): Applied when fuel costs rise sharply. The carrier's cost increase becomes your cost increase, even if your contract says nothing about it.
War Risk, Port Congestion, Canal Transit charges: Event-driven surcharges that can appear mid-contract with little warning.
The Contract Fulfillment Problem
The average contract fulfillment rate in container shipping is approximately 65%. Roughly one in three contracted containers does not move as agreed.
What Index-Linked Contracts Solve
An index-linked contract ties your freight rate to a published market index such as the NYSHEX Freight Index (NYFI). Instead of locking in a rate that may quickly diverge from market reality, both parties agree that the price will reflect what the market is actually paying.
Key differences from fixed-rate contracts:
Surcharges are embedded: The NYFI includes base ocean freight plus all mandatory surcharges in the shipped transaction data. There is no incentive for carriers to add surcharges on top of a rate that is already market-aligned.
Fulfillment incentive is removed: Neither party has a financial reason to walk away from the contract because the rate moves with the market.
You always pay the fair market price: NYFI reflects actual paid rates from completed shipments, not quotes or survey estimates.
What Index-Linked Contracts Solve
A fixed-rate contract provides the appearance of cost certainty. In practice, surcharges erode the agreed rate and misaligned incentives drive a 35% non-fulfillment rate. Index-linked contracts tied to a transaction-based index like NYFI deliver the cost alignment that fixed-rate contracts promise but rarely deliver.
Learn more about NYFI and index-linked contracting at NYSHEX.com