Shanghai Shipping Exchange is looking at setting up a container-shipping derivates market by year-end to help smooth out volatile shipping rates.
The forward freight agreements, or FFAs, which help guard against fluctuations in shipping rates, will be targeted at small and mid-size exporters, who don’t have the volumes needed for long-term shipping contracts, according to Shanghai International Maritime Information Research Center’s (SIMIC) website. The plan has yet to be approved by the Chinese government.
Citing a Bloomberg article, the web report said some factions support the first forward agreements being tied to a Shanghai container index, as the shipping exchange attempts to persuade the sector to adopt futures.
Shanghai last year launched the Shanghai Containerized Freight Index to act as a benchmark for containerised shipping futures. The weekly Shanghai Containerized Freight Index tracks spot rates for shipments on 15 routes, including to Europe, the Mediterranean and the US. The data, compiled from 15 shipping lines and 15 freight forwarders, reflects more than 60% of global container-shipping, the article said.