Freight derivatives are financial instruments whose value is derived from future freight rates, such as.B. Dry bulk transport rates and tanker rates. Cargo derivatives are often used by end-users (ship owners and grain houses) and suppliers (integrated oil companies and international trading companies) to reduce risk and guard against price fluctuations in the supply chain. However, as with any derivative, market speculators – such as hedge funds and retailers – are involved in both buying and selling freight contracts that offer a new, more liquid marketplace. The Baltic Exchange in London presents the Baltic Dry Daily Index as a market barometer and a leading indicator of the maritime sector. It offers investors insight into the price of offshoring important commodities by sea, but also contributes to the pricing of freight derivatives. The index includes 20 navigation routes measured from time maps and covers different bulk carriers of different sizes, including Handysize, Supramax, Panamax and Capesize. FFAs are financial instruments traded on a principled basis, mainly against the averages of the on-time charter for the Capesize, Panamax, Supramax and Handysize vessels. Our dedicated freight options team is also able to offer a full range of option strategies tailored to individual customer needs. Through Clarkson Platou Futures, we offer shipowners, banks, investment companies and other institutions that wish to manage freight risk by increasing or reducing risk, a full FFA (Forward Freight Agreement) and specialized brokerage services for commodity derivatives Instruments are charged with different freight rate indices published by the Baltic Exchange and the Shanghai Shipping Exchange. On the other hand, cleared contracts are daily through the designated clearing house. At the end of each day, investors receive or owe the difference between the price of paper contracts and the market index.

Clearing services are offered by leading exchanges, including nasdaq OMX Commodities, the European Energy Exchange and the Chicago Mercantile Exchange (CME), to name a few. Freight derivatives include exchange-traded futures, swap futures, freight sharing agreements (FFAs), container freight exchange agreements, container freight derivatives, and physical freight derivatives….