Index linked

Index-linked describes a charter where the hire or freight floats against a published freight index rather than being fixed at a flat number for the period. A dry-bulk period charter might set hire at the Baltic 5TC average for the relevant class, often plus or minus an agreed differential or premium, recalculated each settlement period. The structure shares market risk between owner and charterer: the owner earns the prevailing market rate, and the charterer pays no more than market. Index-linked deals are frequently paired with an FFA so either party can convert the floating exposure back to a fixed rate. Container index-linked contracts reference the SCFI or Xeneta XSI.