Freight derivatives are not complicated

Freight derivatives are tools to hedge the volatile freight market. They are called Forward Freight Agreements (FFAs). FFAs Differences (CFD) that are not traded on an exchange but over-the-counter (OTC). Important to note is that FFAs do not involve delivery of goods but that it is a cash settled instrument hence a CFD.

  • The empires of the future are the empires of the mind
    Winston Churchill
  • Necessity never made a good bargain
    Benjamin Franklin
  • But it is pretty to see what money will do
    Samuel Pepys
  • If you can look into the seeds of time, and say which grain will grow and which will not
    William Shakespeare
  • A witty statesman said, you might prove anything by figures
    Thomas Carlyle

Examples how to use FFAs for bulk, tanker and container

Basis of FFAs are the freight indices published by the Baltic Exchange Ltd. in London, which also provide the data for the settlement and daily marked-to-market

Bulk Indices

Bulk Indices

List of bulk freight indices
BCI, BPI, BSI, BHSI

tanker indices

Tanker Indices

List of Baltic tanker indices
BDTI, BCTI

container indices

Container Indices

List of tradable container indices
SCFI, WCI

latest work/Bulk FFAs

Bulk FFA

Examples and slideshow on how bulk FFAs work
Basic FFA examples from a trading perspective and from a ship owners point BCI Route 4 Richards Bay / Rotterdam – coal trader (Charterers) hedge

It is the beginning …

tanker ffas

Tanker FFA

Example Tanker FFA
TD3 260,000 mts crude oil Middle East Gulf to Japan

It is the beginning of February, an oil trader spots a good price to purchase oil with delivery October. He calculates the sale price …

container swaps

Container FFA

Container Freight Swap Agreements

The basis for container derivatives is the Container Freight Swap Agreement (CFSA). It is a simple cash settled transaction, a Contract for Differences (CFD). It does not involve any physical deliveries – …

Useful links

Consultancy, Keynotes, Training and Dispute Resolution

Core expertise is building, restructuring and leading business units in broking, trading and commercial risk management of dry and gas freight, fertiliser and container products as well as bringing OTC commodities onto electronic trading platforms

  • The empires of the future are the empires of the mind
    Winston Churchill
  • Necessity never made a good bargain
    Benjamin Franklin
  • But it is pretty to see what money will do
    Samuel Pepys
  • If you can look into the seeds of time, and say which grain will grow and which will not
    William Shakespeare
  • A witty statesman said, you might prove anything by figures
    Thomas Carlyle

extensive experience in charter, commodity & derivative markets

Karina Albers has extensive experience in the charter market, commodity & derivative markets for shipping, fertiliser and in energy. She has played a leading role in building the freight derivatives industry since 1997. Before establishing her own consulting business, Ms Albers spent three years heading the ship broking division of the German shipowner Ernst Russ GmbH & Co KG in Hamburg. Prior to that she spent three years in Brussels with Yara Belgium S.A. setting up their fertiliser derivative trading operation as well as being in charge of their fleet of LPG carriers. www.karinaalbers.com

  • The empires of the future are the empires of the mind
    Winston Churchill
  • Necessity never made a good bargain
    Benjamin Franklin
  • But it is pretty to see what money will do
    Samuel Pepys
  • If you can look into the seeds of time, and say which grain will grow and which will not
    William Shakespeare
  • A witty statesman said, you might prove anything by figures
    Thomas Carlyle