Four reader questions about contract renewals

September is when the contract questions arrive. By now most shippers have seen two months of falling spot rates and one set of renewal letters from their carriers, and the two do not agree. These are the four questions that came in most often, lightly edited and anonymised.

Should I renew now or wait for the October spot dip?

You are asking whether spot rates will fall further. They might. I would not build a contract strategy around that guess, because the useful question is how far apart spot and contract sit today on your lane, and what it costs you to be wrong in either direction.

On Asia to North Europe this week, the median contract rate for a 12-month deal is about $2,900 against spot at roughly $3,450. A contract that is 16% lower than spot looks like a bargain until you remember that contracts carry a minimum quantity commitment and spot does not. If your volume is steady, take the contract. If your volume swings by more than 30% across the year, the minimum is a trap, and I would move only part of it.