Freight Derivatives Trading and Value At Risk in Shipping

What is happening in the Freight Derivatives Markets?

Ocean freight derivatives markets are alive and growing, in spite of the closure of Enron Online and BIFFEX in 2001. A number of new participants have been coming into the market, and there is strong demand for freight derivatives traders. The main growth has been in OTC (Overthe-Counter) dry cargo swaps or FFAs (Forward Freight Agreements), but tanker swaps are catching up fast. At the end of 2001 Imarex (International Maritime Exchange ASA) launched its first tanker freight futures contracts. With solid backing from major players in the market, including ship owners and oil companies, Imarex is likely to show strong volume growth in both tanker and dry cargo futures during 2002. This will also be positive for the OTC market.

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