Citing rising demand for freight derivatives for means of hedging against the volatility of rates, HSH Nordbank has announced plans to offer container freight forward agreements in the market.
Dirk Reiche, head of products, noted that there were large swings in Asia-Europe spot rates over the past year and said that the bank’s clients are eager to hedge the risk inherent in such volatility.
“Using FFAs makes it possible to limit the freight rate risk,” he said. “Both importers and liner shipping companies benefit from the advantages of this hedging instrument in equal measure.”
HSH Nordbank’s FFAs — forward transactions separate from the freight contract — are intended to make it possible to fix freight rates up to two years in advance, based on the Shanghai Containerized Freight Index.
The bank’s announcement comes in advance of the Container Freight Derivatives Association’s Global Freight Forum in Hamburg on Jan. 17.