ICAP Shipping’s Dry Cargo department provides extensive coverage of this complex and volatile market.
With the help of its comprehensive tonnage database, access to ICAP’s commodities team, and with its close integration with the FFA department, ICAP Shipping’s Dry Cargo department can offer clients unequalled market knowledge and insight. The company’s proficiency in this area is recognised by its seat on the Baltic Exchange Panel.
Operating out of London and three other offices worldwide, ICAP Shipping’s brokers offer an expert and specialist service to clients across the globe. The dry cargo desk is involved in shipments of all sizes within the dry cargo segment and is handling a range of cargo portfolios and vessels exclusively on behalf of renowned industry participants.
Container Freight Derivatives
Container Freight Derivatives are primarily used by shipping lines, freight forwarders, trading companies and banks for managing freight rate risk of containerized cargo.
The recent volatility of shipping markets and macroeconomic uncertainty, combined with the introduction of a benchmark index, has fuelled the rapid development of Container Freight Swap Agreements (CFSAs). These instruments create opportunities for many players who were previously unable to take a more active approach to risk-management in the physical container shipping market, to protect themselves from adverse market movements through a hedge of costs or revenues, or perhaps speculate on future freight rate fluctuations.
The main terms of an agreement will cover:
* the agreed route.
* the day, month and year of settlement.
* contract quantity.
* the contract rate at which differences will be settled.
Settlement is effected against the relevant route assessment of the Shanghai Container Freight Index (SCFI) published by the Shanghai Shipping Exchange (SSE). Settlement is calculated on the average of each publication date during the contracted month. Payment is made between counter parties in cash within five days. Counterparty risk can be mitigated by using the services of one of the two major Clearing Houses offering their services in this new market segment.
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