JPV NEXA | COST INTELLIGENCE | EPISODE 2 OF 4
A Price Index Is Not a Supplier Quotation
Choosing the right benchmark
Prepared 11 October 2026. Review master; not published.

00:00 - An index is not a quotation | George (British male)
If a price index increases by eight per cent, should your contract price also increase by eight per cent? Usually, that is the wrong question.
In episode one, we priced the whole delivery commitment. Now we ask which evidence supports each cost assumption.
An index describes movement in a defined market. A supplier quotation describes an offer, with its own specification, quantity, delivery terms and validity.
The contract determines whether, when and how your selling price may change. These three pieces of evidence serve different purposes. None replaces the others.

00:40 - Food: match the product, not just the headline | Emma (British female)
The F A O Food Price Index tracks a basket of internationally traded food commodities across five groups. It provides context, not the delivered price of your particular product.
A vegetable oil indicator does not specify your bottle size, packaging, certification, testing or delivery location.
For fish, confirm species, product form, size and processing before comparing offers. A broad food index cannot settle those differences.
Match the commodity, grade, purchasing market, currency, unit and observation period. Then obtain a comparable quotation for the compliant product.
If you use an imperfect proxy, record the mismatch. Do not present it as an exact measure of your supplier's cost.

01:23 - Fuel: crude oil is only part of the picture | George (British male)
Fuel needs the same discipline. A crude oil benchmark is not a delivered diesel quotation.
Refining, distribution, taxes and the purchasing location can change the relationship between the two.
Check the required fuel grade, delivery point, volume, currency and whether the published series includes taxes.
A national retail average may be a poor match for bulk deliveries in another country. State the limitation instead of hiding it.
Also check your transport quotation. If it already includes a fuel surcharge, do not add the same fuel exposure again as a separate freight cost. Keep each cost boundary clear.

02:06 - Freight: price the complete route | Emma (British female)
Freight indicators also have boundaries. Drewry's World Container Index measures spot rates across selected major trade routes; it is not a quotation for every destination.
Do not assume that a dry container indicator prices a refrigerated shipment. Match equipment, temperature needs, weight, route and shipment window.
For multimodal delivery, identify collection, main transport, transhipment, clearance and the final inland leg.
Ask which terminal charges, surcharges, free time and delay costs are included or excluded. The quotation and agreed delivery terms must answer that.
A cheaper ocean leg can still produce a more expensive or less reliable delivered service. Compare the whole journey.

02:49 - Insurance: compare the cover as well as the premium | George (British male)
Insurance is not simply a percentage copied from a market report.
Obtain a written quotation for the insured goods, value, journey and relevant risks. Compare the cover, exclusions, deductible, limits and validity, not only the premium.
For temperature sensitive food or challenging routes, ask the insurer or broker to confirm the relevant protection and conditions explicitly.
An insurance market trend may prompt a review. It does not establish what your shipment will cost to insure or which losses would be covered.
Treat a different level of protection as a scope change, not automatically as a saving.

03:32 - Make the comparison reproducible | Emma (British female)
Make the comparison reproducible. Record the exact series, publisher, market, unit and currency, alongside the quotation it helps you assess.
Keep the baseline period separate from the publication date. A monthly average is not a price on a particular shipment day.
Record publication frequency, data lags and revisions. Use the agreed version and reference period when the contract specifies them.
Explain any proxy mismatch, save the evidence and assign someone to review it. Check quotations again if the award or shipment is delayed.
As episode one explained, harvest buying and advance booking still need a total cost and risk assessment. Better data supports that decision; it does not guarantee a saving.

04:15 - An 8% component change is not an 8% total change | George (British male)
Here is a deliberately simplified illustration, using invented cost units rather than a real supplier quotation.
Suppose total baseline cost is one hundred units: fifty for a commodity and fifty for everything else.
If that commodity cost actually rises by eight per cent, and all other costs remain unchanged, the total becomes one hundred and four. That is a four per cent total increase.
An index movement alone does not prove that the commodity cost changed by that amount. The assumed pass through must be tested against evidence.
This is a sensitivity lesson, not a contract adjustment formula or a justification for changing your selling price.

05:02 - Keep evidence from proposal to performance | Emma (British female)
Return to our illustrative three plus one plus one scenario: roughly one year of preparation and mobilisation, three initial fixed price years, and a first possible review in year four.
Those are assumptions for this series, not universal contract rules. Extensions and price increases are not guaranteed.
Check whether mobilisation is before or within the initial term; do not count it twice.
Keep a dated evidence trail from the proposal onwards: the source, reference period, quote validity, exclusions and person responsible.
Next, we separate price changes from quantities, product mix and operational losses. For a tailored review, contact J P V NEXA through the website.
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