Introduction

As recently as last May, the freight market appeared to be in the midst of a major boom cycle. The Baltic Exchange Dry Index (BDI), which measures the cost of shipping dry commodities, was perched at record highs, trading volumes of freight derivatives were growing strongly, and there was talk of a wider variety of investors entering the market, keen to diversify portfolios.

Eight months on, and the market is looking pretty bleak. Freight costs have slumped, partly due to the collapse in demand f