Forward Freight Agreement (FFAs)

  • Overview
  • Contract Specifications
  • Execution Fee

Forward Freight Agreements (FFAs) are financially settled derivatives contracts (with no physical delivery) settled against the monthly average of different daily indices for dry bulk freight costs published by the Baltic Exchange in London.

After recent sharp declines, the dry bulk freight market is poised to improve gradually over the next couple of years to compensate for the over correction in freight rates. The freight market is seeing a relatively strong demand since steel demand appears to be back on track and China iron ore demand remains strong in 2013. However, overcapacity in the market still keeps the freight rates under pressure. As the volatility of freight rates is enormous, hedging can have a significant effect on one’s portfolio.

FFAs offer ship owners and operators, charterers and traders a means of protecting themselves against the volatility of freight rates. FFAs also provide protection for financial investors with exposure to actual freight, which moves up and down in tandem with global demand for raw materials and basic commodities such as iron ore, coal and grains.

CLTX aims to provide a neutral venue for this demand and bring new participants and liquidity to the market. For more details, please find our latest Freight product brochure.


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