Derivatives for containers?

Joseph Bonney | Mar 4, 2010 8:57PM GMT

Maersk Line CEO Eivind Kolding told a JOC Trans-Pacific Maritime conference audience that he wasn't enthusiastic about container derivatives market that Clarkson Securities is trying to develop.

"If people want to have a casino for freight rates, that is their choice ... I don't think there's really a need for it," Kolding said. He added that Maersk isn't taking a position for or against container derivatives but prefers to stabilize rates through long-term contracts instead of hedging on a derivatives exchange. Other carriers at TPM expressed similar views.

Freight derivatives are new for container shipping, but the Baltic Dry Index of bulk rates has been used for years as the basis for buying and selling freight futures contracts for dry bulk cargoes. A Wall Street Journal article suggests that in an era of rising capacity, the BFI could lose some of its importance (the BFI's publisher, the Baltie Exchange, disagrees).

What do you think about a derivatives market for container shipping?

I don't think you can compare the Baltic Exchange commodities to the general cargo moved in containers. Unless you really want to make the container shipping industry a commodity
And derivatives make me think of the housing financial debacle as well as Enron and even Bernie Madoff, although his was more of a Ponzi scheme. But derivatives were involved in all of these apparent scams.
I don't think we need them, but I'd like to see the details

- By Kingston4811 on 3/5/10