Escolar Documentos
Profissional Documentos
Cultura Documentos
•Worldscale
•The Baltic Exchange & Platts
•The Baltic Panellists
•Freight Market Volatility
•The Growth of the FFA market
•FFA Mechanics
•The FFABA Forward Curve
•Trade Examples
•Options
Worldscale (WS)
ME Gulf/Japan WS 342.97
$11.24m
(260,000mt) WS 130.00
$1.685m
WS 50.33
W Africa/USAC WS 399.97
$5.280m
(130,000mt) WS 175.00
$1.229m
WS 91.25
WS 330.91
North Sea/Cont $1.059m
(80,000mt) WS 178.00
$0.338m
WS 97.05
Growth in FFA trading:
Volume of tanker FFAs fixed
400
350
participants
300 20% owners
million tonnes
50
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
• Established 1880
• Largest privately owned shipbroker in
the world
• Worldwide network of offices
• Represented on all major shipping
committees & indices.
24 futures brokers,
• Expertise in:- London & Singapore
– Dry Cargo
all FSA registered
– Tankers
– FFAs
– Research and Consultancy - Team of 10 analysts
– Sale and Purchase on tanker & dry bulk markets
– Agency and Towage
What is a Forward Freight Agreement?
An FFA is a Swap
HEDGE
• manage freight exposure & SPECULATE
cash flow
• High Volatility
• flexibility & ability to react • Cash settled
swiftly to spot market volatility • Clearing available
(rather than time charter) • FSA regulated
• trade-out of contracts
prior to settlement
Baltic International Tanker Routes
Dirty Routes:
ROUTE DESCRIPTION SIZE
• TD1 MEG-USG 280K
• TD2 MEG-Sing 260K
• TD3 MEG-Japan 250K
• TD4 W Africa - USG 260K
• TD5 W Africa - USAC 130K
• TD6 Cross Med 130K
• TD7 North Sea – Cont 80K
• TD8 Kuwait – Spore 80K
• TD9 Caribs - USG 70K
• TD10 Caribs- USAC 50 K
• TD11 Cross Med 80 K
Baltic International Tanker Routes
Clean Routes
(31%) x 354,400
Conclusion
Our Trade has generated a profit of roughly $440,000.
If we were using the trade to cover physical exposure then this would be
available to offset our increased freight costs in Q4.
A full 260,000mt trade would have generated $5,720,000
By hedging we are able to fix our future costs according to known FFA pricing .
The decision not to hedge leaves unknown risk exposure.
FFAs can effectively manage freight risk.
Options:
London: Singapore:
Rob Dennis + 44 20 7977 7524 Andre Berry +65 6536 7988
Mark Reddihough + 44 20 7977 7594 Sharon Chua +65 6536 7988
William Mew + 44 20 7977 7580 Glenn Byrne + 65 6536 7988
Steven Pritchard + 44 20 7977 7593