Ocean contract vs spot
Ocean contract or spot rates: how to secure your rates and your space
A spot rate is the day-to-day market price: flexible, but volatile and with no guarantee of loading. An annual negotiated contract fixes a rate and a space commitment over twelve months: more predictable, but it commits you on volume. Most shippers do not choose, they split: a contracted base on regular volume, spot on the variation. And on tight lanes the real issue is not the rate, it is the guarantee of getting loaded.
“How much is a container from Shanghai to Le Havre?” has no single answer, and that is the whole point. Depending on whether you buy on spot or under an annual contract, the same container in the same week can carry two very different prices - and, in a tight market, one of them sails and the other does not.
Spot: the market price, day to day
A spot rate is valid for a few days to a few weeks. It follows supply and demand, with very sharp swings: the gap between a soft market and a crisis peak can exceed a factor of three on the same lane.
- Upsides: no volume commitment, the chance to benefit from a soft market, free arbitrage between carriers.
- Limits: no budget visibility beyond a few weeks and, above all, no loading priority. During congestion, a spot booking is the first to be rolled to the next sailing.
The annual contract: a price and a space commitment
A negotiated contract, often called a NAC, sets rates by lane for a period typically of one year, in exchange for a volume commitment. What you actually buy goes beyond the price:
- a space allocation, meaning a number of containers reserved each week;
- priority when the market tightens;
- negotiated free time, often above market standard, which cuts demurrage at destination;
- partial protection from volatility: when spot spikes, your contracted base holds.
In exchange, you commit to minimum volumes and you do not benefit from a market collapse on the contracted share.
The real issue is not the rate, it is capacity
This is the point that price comparisons systematically miss. A rolled booking costs a week of transit, sometimes a stockout, sometimes a customer penalty. On a tight lane, that dwarfs the rate difference.
Recent crises made it visible: during the logistics squeeze of 2021-2022 and then the Suez Canal diversions of 2024, contracted shippers kept loading at negotiated terms while spot doubled and space disappeared. So the question to put to a provider is not only “what is your rate?” but “what is your allocation compliance rate?”.
How to split contract and spot
A healthy split follows three principles:
- Contract the floor volume. The one you will ship whatever happens, on your two or three main lanes. That is what needs protecting.
- Leave the variation on spot. Seasonal peaks, promotional runs, new lanes under test: there is no point committing on what is not recurring.
- Revisit at every cycle. A contract signed at the top of the market becomes expensive at the bottom, and the reverse. The split is not fixed for three years.
What a multi-carrier approach changes
A contract with a single carrier exposes you to that carrier’s policy: its congestion, its increase, its rollover become yours. A provider holding contracts with several carriers can arbitrate shipment by shipment - best transit time, best price, best reliability depending on the moment - while you see a single rate.
| Situation | Single carrier | Multi-carrier |
|---|---|---|
| Congestion on a vessel | you wait for the next sailing | switch to another carrier |
| One carrier raises rates | you absorb it | shift to the most competitive |
| Rolled booking | a week lost | immediate alternatives |
| Geopolitical crisis | dependent on one carrier’s policy | contracts activated across several |
That is the logic OVRSEA follows, backed by a French transport and logistics group that pools more than 50,000 TEU a year and contracts with the major carriers (CMA CGM, MSC, ONE, Evergreen, HMM, COSCO, OOCL, Yang Ming): you get a single rate, the arbitrage between carriers happens behind the scenes.
The classic mistake: negotiating the rate and forgetting the clauses
An attractive rate with no allocation, no negotiated free time and no clear revision clause is a false bargain. At the first squeeze you discover the price was guaranteed but the space was not. Negotiate all three together: the rate, the space and the conditions at destination.
FAQ
Contract or spot: which is cheaper?
Neither, systematically. In a soft market spot often drops below contract levels and fully contracted shippers pay more. In a tight market the reverse is true, and the gap can be very large. A contract does not buy the lowest price: it buys budget predictability and priority access to space.
What is a NAC contract in ocean freight?
A NAC (Named Account Contract) is an ocean freight contract negotiated between a shipper, or its forwarder, and a carrier, typically for a year. It sets rates by trade lane, a minimum volume commitment and often side conditions: weekly space allocations, extended free time, priority when capacity tightens.
What volume do you need to access an annual contract?
Direct with a carrier, it usually takes several hundred containers a year. Through a forwarder, you access its pooled contracts: your volume is added to that of its other clients, which unlocks terms you could not reach alone, without such a heavy volume commitment.
How should you split between contract and spot?
The usual rule is to contract the floor volume, the one you will ship whatever happens, and leave the variable and seasonal part on spot. That protects the budget on the base while keeping the option to benefit from a soft market on the rest. The split should be revisited at every negotiation cycle.
Does a contract really guarantee my cargo will sail?
A good contract includes an allocation, meaning a number of containers reserved each week on a given lane. It is that clause, more than the rate, that protects you during congestion or a crisis. Check your provider's allocation compliance rate: it is the only indicator that matters when the market tightens.