Frequently asked questions

Methodology

What is the logic behind the routes that are on offer?
The 11 routes reported by the World Container Index are designed to provide an overall picture of conditions on the major East / West container trade lanes. In the future it is likely that more trade lanes or port pairs will be added with demand. If there is a particular route that is important to your business which is not listed please suggest it to us via our website.
Why are market assessments for FAK rates only?
Freight All Kinds (FAK) rates are common, general rates which are not specific to a particular commodity or special pricing conditions. Because of this, FAK is the only group of cargoes that provides a good benchmark of the overall market conditions.
Why are rates measured for 40ft containers only? Will this change in the future?
Research conducted prior to the launch of the index suggested that forty foot units are the size that organisations are most comfortable working with. Rates for forty foot containers will always be a part of the index. However, in markets where there are pronounced differences in rate trends between twenty and forty foot containers it is likely that twenty foot rates will be added too.
Will rates for other cargoes be added in the future?
It is possible that rates for other cargo types, such as reefer cargoes, could be added in the future. The index has and will continue to be shaped by demand from the market, suggestions for new cargo types will be welcomed, please make these via our website.
What is the logic of including some surcharges and not others?
The rates reported by the index are Container Yard-Container Yard rates and all surcharges normally included in these terms are listed. The surcharges which are excluded (bill of lading fee, booking fee, Customs clearance fees) are not generally considered to be part of the freight rate.
Why are some THC's included and others not?
The inclusion of THC's at origin, destination, both or not at all on different routes is in line with the established practice within the industry, where the inclusion or exclusion of THC's depends on the trade route For example, rates to and from the US always includes the US THC.
What is the volume of containers associated with each market assessment?
No specific volume of containers is defined for each market assessment so any volume that is moving on a true spot basis may be included. The spot basis is defined by the standard nature of the cargo (FAK) and equipment, and the validity of the rates (not less than 7 calendar days and not more than 1 calendar month). In practice this means that very small or very large shipments will be excluded as it is unlikely that an organisation that has very large numbers of containers to ship each month would do so on a short validity FAK rate basis.

Reliability and continuity of the index

Will the index be regularly audited for quality and control procedures?
Yes the index will be audited. The date of the first such audit will be published on the WCI's website.
How do I know that the index is fair and trustworthy?
First, the index is compiled by a neutral joint venture (WCI) between 2 organisations (Drewry and ClearTrade) which are neither buyers nor sellers in the market. Second, the index will be audited. Third, WCI procedures ensure that one market reporter cannot skew the index (see below). Four, the composition of the market reporters is designed so that a minimum number of market assessments on a minimum number of carriers are gathered for each route. Five, Drewry is market leader in container freight rate intelligence and has published container freight rate indices since 2006, which are regularly published in leading industry publications (Lloyd's List, Journal of Commerce, Hong Kong Shippers' Council etc…).
Surely some market reporters will be influenced to give different prices, e.g. carriers higher and shippers lower rates, won't they?
Market assessments provided to the World Container Index are for agreed rates only, not quotes, tariffs, estimates, bids or offers so it is not possible for the market reporters to artificially inflate or deflate prices.
Can one market reporter deliberately skew the index?
Because rate assessments are for agreed freight rates only this makes it very difficult for a market reporter to deliberately skew the index. However Drewry Shipping Consultants has a careful monitoring and audit procedure in place which eliminates any market assessments that are drastically different from the rest.
How is the rate input guaranteed for all routes for each week and what happens if the minimum number of market assessments cannot be reached?
The minimum number of 8 rate assessments per route per week* is significantly below the average number collected, this allows a buffer should 1 or more market reporters not be able to submit all or any of their market assessments for that week. In the event that the minimum number of market assessments is breached Drewry Shipping Consultants Ltd will use their expert opinion to provide an estimate of average agreed freight rates on similar routes to the one in question. * Note: at the time of writing, World Container Index is considering setting a higher minimum number of reports for each route; information on this will be communicated in June or July. If this happens will it be publicised? Should this eventuality take place it will be communicated via the WCI website.
Is it possible for market assessments to be duplicated lowering the number of assessments per route?
Due to the balance of market reporters used on each route it is not possible that a single market assessment will be duplicated.
Due to the balance of market reporters used on each route it is not possible that a single market assessment will be duplicated.
Due to confidentiality reasons and competition regulations it is not possible for the WCI to provide documentary evidence of agreed rates.

Market Sources / Reporters

Why are market reporters based in different countries?
Market reporters are based in different countries to ensure that the index provides the best possible representation of a market rate. Rate assessments will be provided by organisations in both origin and destination regions ensuring that the average published is geographically neutral.
Which sources are used?
WCI receives market assessments on current carrier rates from market reporters (shippers, intermediaries/forwarders, others) located in Asia, the US and Europe. The market reporters do not include carriers. In other words, WCI assesses carrier rates via the carriers' customers (shippers, intermediaries/forwarders, others), not direct from the carriers.
What are the names of the market reporters?
WCI does not disclose the names of the market reporters.
Why is it that the identities of market reporters is not being revealed?
In many cases the agreements that the WCI has with its market reporters prevent the release of their identities. Not knowing who the market reporters are also avoids the risk that a particular carrier may try to manipulate the index by agreeing an artificial rate with one or more of the market reporters.
Will new / more market reporters be added over time?
The World Container Index will always be interested in finding new market reporters that are capable of supplying quality data that satisfies its methodology, particularly if those sources are able to supply data for new routes, cargo types or commodities. Any organisations wishing to discuss becoming a panellist/market reporter should contact the WCI via its website.
Is it important who the market reporters are?
It is not the exact identities of the market reporters that are important but the balance of different types and locations of organisations who provide the rate assessments.

Rate Indices in General

What if my contract terms are different than those reported, can I still use the index?
Yes. The index is designed so that most organisations' contract terms will be the same as the data reported. However, if this is not the case, it does not mean that the index cannot be used. Whether an organisation wishes to use the index for derivative trading, adjustment of physical contracts (index-linked contracts) or for price benchmarking prior to negotiations, what is most important is not the correlation between one physical market rate and one week's assessment on the index but the correlation between the trend in both over time. A high correlation in this trend can be observed even if terms are not the same. For example, if your company's rates include THC's at origin and destination whereas the WCI index on the same route includes only the THC at destination, the correlation between the two should be very close, as the THC component rarely, if ever, changes during the course of the year.
If my cargo is all in 20's and rates are reported in 40's can I still use the index?
Provided that the offset between 20 and 40 container rates remains constant, as it does on many container trades the correlation between the trend in rates should not be affected. If you ship in a market where this is not the case and you would like to see twenty foot rates reported separately please suggest this via the WCI's website.
If the rate reported on the index is different from my own, does that mean that the index is not accurate?
The index is designed to report a market rate which is as accurate and representative as possible. However due to the nature of container shipping, there are very rarely times where there is only one market rate for all carriers and for all shippers of all sizes. It is very possible therefore that the rate reported on the index may be higher or lower than your own rates. What matters is that the trend of your company's rates is very close to the trend of the WCI index.

Others

Can I still use the index if I don't want to trade container freight derivatives?
Yes the index can be used for a number of purposes other than just trading of container derivatives. Examples of these are index-linked container contracts or benchmarking spot rates prior to contract negotiations.
Yes the index can be used for a number of purposes other than just trading of container derivatives. Examples of these are index-linked container contracts or benchmarking spot rates prior to contract negotiations.
The only true way to measure the accuracy of any index is to compare the trend in the rates it reports against the trend in the actual market. This can be done by comparing the index's historical rates against an organisation's actual rates over the same period. If this cannot be done then examining the correlation between one index and another may prove as a measure of accuracy. The fact that the World Container Index is regularly audited for quality, its methodology is transparent and that its market assessments are collected and complied by internationally recognised and independent consultants in the form of Drewry should also ensure its accuracy.
Where can I get more information about container indices and container derivatives?
Information regarding container indices, their potential uses (including index-linked contracting) and container derivatives can be found in the education section of the WCI website. Alternatively those wishing to know more should contact Drewry Shipping Consultants Ltd www.drewry.co.uk or the Cleartrade Exchange www.thecleartrade.com Another useful source of information can be found in the Container Freight Derivatives Association (CFDA).
What happens if the balance of world trade changes. Will the weightings for the composite index change?
Minor changes in the balance of world trade will not influence the weighting of the composite index. If a major change in this balance is witnessed then there will be a change to the composite index. If this situation should occur then a notice will be published on the WCI website and sent via email to all users detailing the changes that will be made to the composite index weighting. Changes will then be made no sooner than 12 calendar months from the date of this announcement. Should there be any derivative positions open against the composite index at that time, a change will only be made after the last settlement date of these.
Will new routes or cargo types be added in the future? How will this affect the composite index?
It is the intention of the World Container Index to diversify the routes on which it reports with demand however the intention is also to maintain the integrity composite index. It may be therefore that if a number of new routes are added (for example covering trades between North and South) that a new composite index may be added. This situation will be addressed more fully when and if it arises.