The Shanghai Shipping Exchange’s announcement to introduce risk management tools to help shippers trade derivatives comes as the Federal Maritime Commission considers allowing shippers to use the organization's index to negotiate contracts.
The exchange’s objective is to provide “comprehensive, timely and accurate,” data, SSE President Zhang Ye said Thursday at a press conference hosted by FMC Chairman Richard A. Lidinsky Jr. The SCFI is a daily composite of spot rates on 15 trade lanes to principal global destinations from the port of Shanghai.
By the Numbers: SCFI- Shanghai Containerized Freight Index
Zhang said there is growing interest among shippers to trade in rate derivatives to mitigate risk from fluctuating rates. The transactions are popular in Europe, but only five U.S. shippers have entered the market. The SSE will establish trading platforms in London and Singapore, and the company recently launched platform in China for Chinese carriers, shippers and third parties such as financial institutions.
The exchange also plans to establish a platform for selling vessels that is intended to stabilize the trading market in China. It will include a transaction template that parties can use for conducting transactions.