Freight looks forward

There’s a buzz surrounding the hitherto sedate freight derivatives market. Longused by oil companies wanting to hedge rising or volatile shipping costs, themarket is now increasingly being viewed as a place in which financial institutionscan operate and make money. Traded volumes of forward freight agreements (FFAs)quadrupled in 2004 according to most estimates, and turnover rose from $2-$4billion in 2002 to over $30 billion in 2004.

“Freight is increasingly being recognised as a commodity,” says