A practical, index‑linked system to convert volatile reefer rates into a simple per‑kg surcharge. Includes formulas, sample clause wording, index selection (SCFI vs FBX vs Drewry), trigger thresholds, and buyer communication that protects margins without losing accounts.
We’ve lived the pain of quotes blown up by ocean freight. In late 2024 we watched two lanes jump nearly overnight and eat 6–8% of margin. In 90 days we recovered predictability using a simple system: convert reefer freight to a per‑kg adder, link it to a published index, and lock it into purchase order terms with sensible triggers and collars. This article is the exact playbook we now use for Indonesia‑origin seafood.
The three pillars of a durable seafood freight surcharge clause
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Anchor to a public index with a clear baseline. We prefer lane‑specific FBX values for USD/FEU transparency. SCFI works as a proxy with a conversion factor. Drewry is a good quarterly referee for reefer differentials.
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Convert container rates to a per‑kg adder using net sellable kilograms, not theoretical payload. This means factoring glaze, pallets, airflow gaps, and realistic utilization.
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Add thresholds, collars and cadence. Set a trigger so tiny GRIs don’t move price. Cap swings within a window. Update on a fixed schedule with written notice.
That’s the framework. Now let’s build it.
Week 1–2: Map your lanes and validate assumptions (tools + templates)
Here’s the thing. Most surcharge fights start with bad math on kilograms.
What’s a simple formula to turn a reefer container rate into a per‑kg cost adder?
Use this two‑step approach.
- Net sellable kg = Payload kg × Utilization × (1 − Glaze%)
- Freight adder per kg = All‑in container cost ÷ Net sellable kg
Where “All‑in container cost” equals your ocean rate plus origin documentation and THC you pay under the Incoterm, plus pre‑carriage or on‑carriage you’re responsible for, plus a budget for known surcharges (BAF, PSS, EBS, GRI if published) that you expect to pay on this lane.
Example. 40’ reefer to USWC.
- Base all‑in FEU: 6,800 USD
- Payload: 26,500 kg practical
- Utilization: 92% (airflow gaps, carton fit)
- Glaze: 8% (typical IQF)
- Net kg = 26,500 × 0.92 × 0.92 = 22,431 kg
- Per‑kg adder = 6,800 ÷ 22,431 = 0.303 USD/kg
Tip from experience. Don’t assume 100% utilization. We see 90–94% on most Indonesia reefer loads with mixed SKUs. And glaze isn’t negotiable in customs or in your COGS. If you sell on net weight, compute the adder on net. If you sell on gross, compute on gross and disclose the basis.
Where does this apply? Perfect for IQF fillets and portions like Grouper Fillet (IQF) or Mahi Mahi Fillet. It’s also clean for saku and steaks, though yields might push you to a slightly different utilization than cubes like Swordfish Cube (IQF).
How do demurrage and detention factor into a per‑kg seafood surcharge?
We separate them in the clause and handle two ways:
- If delays are under buyer control, pass through at cost with receipts. No per‑kg budget.
- If the lane is chronically tight, include a small per‑kg risk budget and disclose it.
Quick budget method.
- Expected D&D cost per FEU for normal operations: 300 USD (example, 2 paid days total beyond free × 150 USD/day blended). Adjust to your ports and free time.
- Per‑kg D&D budget = 300 ÷ 22,431 = 0.013 USD/kg
We only embed this budget when we know free time is consistently insufficient. Otherwise we keep D&D as a pass‑through. Buyers accept that logic because it’s controllable on their side.
FBX vs SCFI vs Drewry: Which index should we tie seafood pricing to in 2025?
Our rule of thumb.
- First choice: FBX corridor in USD/FEU that best matches your export port and destination. East Asia to USWC/USEC/EUR. It’s already in USD/FEU, so your math is clean.
- Second choice: SCFI for directional accuracy when FBX lane fit is imperfect. Document a conversion factor k that links your negotiated reefer spot to the SCFI dry container value for the route. Re‑calibrate k monthly from trailing four weeks.
- Referee: Drewry Reefer Index. Quarterly cadence. Good for long‑term contracts, but too slow for monthly adjustments. Use it as a sanity check or as the fallback if FBX/SCFI cease publication.
In practice, Indonesian reefer flows correlate well with East Asia indices. We’ve found using FBX plus a reefer premium factor between 1.6 and 2.2 over the dry rate is realistic on US lanes. Document the factor in your clause so no one debates the math later.
Practical takeaway. Pick the index your buyer already respects. Retail programs in North America often accept FBX. Foodservice importers in the EU may prefer SCFI or Drewry. Don’t win the math and lose the relationship.
Week 3–6: Build the MVP clause and test it with two customers
How do I write a freight escalation clause both suppliers and customers will accept?
Here’s sample wording we’ve used and refined. Adapt to your Incoterms and lanes.
- Baseline and index. Pricing is based on FBX [East Asia → Destination] at [Index_Baseline] USD/FEU published on [Date].
- Formula. Freight adder per kg = Base_Adder × (FBX_T / Index_Baseline), rounded to 0.005 USD/kg. Base_Adder = [your per‑kg result at baseline].
- Trigger threshold. Adjustments apply only if FBX_T moves more than ±8% from Index_Baseline, measured as the monthly average for the calendar month prior to shipment.
- Collar. Adder changes are capped at ±15% within the contract period unless both parties agree in writing.
- Update cadence. The adder is reviewed monthly based on the prior month’s average publication and applied to loads sailing the following month.
- Pass‑through surcharges. Published GRIs, PSS, BAF/EBS, and emergency surcharges specific to the lane and period will be passed through at cost with carrier notices appended. If included in FBX_T, they are not double‑counted.
- Demurrage/detention. D&D is excluded from the per‑kg adder and is charged at cost if caused by consignee‑side delays beyond free time. If a D&D budget is mutually agreed, it will be disclosed as [0.013 USD/kg] and reconciled quarterly.
- Evidence and notice. Updates will include a one‑page calculation, index screenshots, and will be issued at least 7 days before cargo readiness.
- Re‑opener. If the index becomes unavailable or deviates materially from actual reefer costs, parties will substitute a mutually agreed published index (e.g., Drewry Reefer) and good‑faith factor k.
That’s the bones. Keep it one page. Lawyers can add the legalese after you prove the math and cadence.
Need help tailoring this to your lane and products? Our team can run the per‑kg math with your actual pack specs and share a clean template you can lift into your POs. If that would help, Contact us on whatsapp.
What threshold or collar prevents tiny GRIs from constantly changing my price?
We like a two‑step guardrail.
- Trigger: no adjustment for moves within ±5–8% month‑over‑month.
- Collar: total movement limited to ±15% within the contract term without re‑opening.
We also average the index for the full month to kill intra‑month noise. That single choice cut our price change emails by two‑thirds.
How do I communicate a temporary freight surcharge without losing the order?
Keep it simple, buyer‑friendly, and specific.
- Explain the why in one sentence tied to a public index.
- Show the math on one line in per‑kg terms.
- Commit to the same mechanism on the way down.
Template we use. “Per our clause, the FBX East Asia → [Destination] monthly average moved +12% vs baseline. This changes the freight adder from 0.303 to 0.339 USD/kg for loads sailing next month. If the index moves back within ±8%, the adder will revert automatically. Attached are the index screen and math.”
If you can, pre‑negotiate the clause before peak season. Nobody likes emergency changes mid‑program. But if it happens, clarity wins.
Week 7–12: Scale, optimize and protect margin
How do I keep a target margin if ocean freight jumps 1,500 USD per FEU mid‑PO?
Do not back‑solve a random percent markup. Convert the delta.
- Delta per kg = 1,500 ÷ Net sellable kg
- Using 22,431 kg net, Delta = 0.067 USD/kg
- Add to your existing adder at next trigger point. If your clause allows mid‑month emergency pass‑through when a published GRI applies to booked sailings, cite the carrier notice.
We track a “margin guard” in our quotes. For example, for Grouper Bites (Portion Cut) we know every 0.05 USD/kg in freight moves gross margin by about 1 point on standard retail packs. This turns a surprise into a controlled adjustment.
Price lists with a floating freight component
- Publish Ex‑Works or FOB fish price.
- Publish a separate line for “Index‑linked freight adder” per kg with the current value and the clause summary. Buyers see the mechanism and expect updates. We’ve found this reduces renegotiation friction for items like Red Snapper Portion (WGGS / Fillet) and Yellowfin Saku (Sushi Grade) where programs run year‑round.
Common mistakes we still see
- Using carton count instead of net kg. Cartons vary in pack weight and glaze. Your math will drift.
- Forgetting pallets. Palletizing can remove 800–1,200 kg of payload in a 40’ reefer depending on carton size and configuration.
- Ignoring Incoterms. If you quote CIF and your clause assumes FOB responsibilities, your adder will be short.
- Mixing spot and contract logic. Anchor to the same family of rates you actually pay. If you buy contract space, note it and cap the premium accordingly.
When this approach doesn’t fit
- LCL reefer or air freight. Different cost drivers and index behavior. Use shipment‑level pass‑through.
- One‑off seasonal buys under DDP where you control last‑mile tariffs that dwarf ocean freight. Keep it fixed and hedge volume.
Resources and next steps
If you take nothing else, take this:
- Always compute on net sellable kg with realistic utilization.
- Pick one public index, document the baseline, and set a sensible trigger and collar.
- Communicate in one line of math and honor the symmetry on the way down.
If you want a sanity check on your lane math or a quick clause redline, we’re happy to share what works across our Indonesia origin programs. Questions about your project timeline or pack specs? Contact us on email. And if you’re aligning assortments for your next program, you can also View our products to see which cuts pack most efficiently for your lanes.