Freight derivatives allow a buyer to take a position on where freight rates will stand at a point in the future. Container contracts offer the same hedging principle as those traded for dry bulk and tanker markets. The container market is currently traded over-the-counter.
Clarkson Securities Limited, the futures broking arm of the leading ship broker, launched the first container freight swap agreement (CSFA) in January.
"We hope within the next six weeks we will be able to say that the first cleared CFSA has been traded," Ben Gibson, freight derivatives broker with Clarkson Securities, told Reuters Insider.
London's LCH.Clearnet, Oslo's NOS Clearing and Singapore Exchange (SGX) clear contracts for dry bulk and tanker freight derivatives.
Gibson told Reuters that two of the three clearers had been in talks with Clarkson Securities, declining to give further details.
The global downturn has hit the container sector hard especially on key routes from Asia to consumers in the West carrying finished goods from electronics to toys.
There have been signs of a pick up in activity in recent months.
Gibson said 124 million TEUs (twenty foot equivalent units) were moved by the container industry last year. Container trade is measured in TEUs.
"We expect that figure to be somewhat higher this year," Gibson said.
Container derivatives are settled against the Shanghai Containerised Freight Index which is compiled by data provider the Shanghai Shipping Exchange.
Morgan Stanley and Credit Suisse have already completed CFSAs separately with counterparties.
Gibson said there was diverse interest for CFSAs including container lines, shippers and logistics providers. (Reuters)
