What it takes to defend a 2027 freight budget

Procurement teams tasked with building 2027 freight budgets are facing a challenging situation as they navigate the tension between two unyielding forces: Finance seeks a singular, defensible budget figure that persists throughout the year. Xeneta recently convened cross-industry roundtables with shippers spanning Atlanta, Houston, London, Cologne, Singapore, and Paris, revealing a common thread: the annual tender procurement system is no longer in sync with the evolving market dynamics.

Reliability's definition and pricing are contested among shippers. In Houston, a six-week Asia-US lane is deemed acceptable with up to five days of delay, while London demands tighter standards. The issue lies in the lack of a unified "on-time" definition and the binary tracking of on-time performance. Two lanes may boast an 85% on-time rate, yet the 15% of delays can vary dramatically—two days to four weeks—making it difficult for customers to discern which lane requires additional safety stock buffers.

Reliability is becoming a negotiating tool rather than a guaranteed service, or it is entirely disregarded altogether. Shippers have enthusiastically advocated for carriers like Maersk and Hapag-Lloyd's Gemini alliance, lauding their reliability as a benchmark. However, even Gemini's performance fluctuates, with schedule reliability ranging from 76.8% to 89.5% across different periods in 2026.

Even at its lowest, Gemini still outperforms other alliances by nearly 40 percentage points, but the disparity between end-to-end and hub-to-hub performance is substantial.

Shippers frequently raise surcharges as a primary grievance. Carriers seldom disclose trigger conditions or calculation methods for surcharges, leading to confusion and mistrust. In one instance, a shipper asked multiple ocean carriers about their bunker adjustment factor for the next quarter, receiving no answers. Xeneta's data reveals that surcharges can rise dramatically, such as an 113% increase in the Far East-Mediterranean surcharge between February and July 2026, despite flat fuel prices. Similarly, Panama Canal transit fees have shown significant variation with no clear justification.

The contracting playbook is adapting to these challenges. Index-linked contracts are emerging as a potential solution, alongside more frequent mini-tenders to mitigate risks. However, shippers are wary of spiraling costs, missing favorable tender windows, and internal processes ill-equipped for such agreements. The money is increasingly won or lost during contract execution rather than during the award phase.

Procurement teams recognize the importance of answering critical questions about carrier selection, risk management, execution, cost divergence, and renegotiation opportunities.