Forward Freight Agreements (FFA) 2008

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) June 17, 2008 -- Forward Freight Agreements (FFA) 2008
This Report highlights how trading in shipping derivatives, primarily Forward Freight Agreements (FFAs), has seen significant growth since 2000 and is set for further expansion. However, whether 2008 turns out to be a good year or a bad year for FFAs will depend on how deep the “credit crunch” bites affecting the “real economy”.

What does it all mean? The report shows the importance of bringing financial risk management and protection market positions to the fore. Ill thought out strategies could be catastrophic. No other source of intelligence provides as much detail, assessment or insights.
Forward Freight Agreements (FFA) - FFAs coming of age?

For FFAs, an interesting future awaits. This latest report is comprehensive in its breadth of data and commentary on this maturing instrument which, set against turmoil in the financial markets, could be profitable but needs careful handling and prudent risk management.

Key information :
FFAs – pros and cons
FFAs – recent performance
Range of products and options
Fundamentals ship market dynamics
The concept of risk management

New outlets for trading in shipping derivatives products
Main findings

Trading in shipping derivatives, primarily Forward Freight Agreements (FFAs), has seen significant growth since 2000 and, today, the FFA market has reached an important stage in its development. Its volume, liquidity and depth appear to have achieved a ‘viable mass’. Furthermore, the pointers are that it should continue to grow. It is developing its own identity and it has begun to exert some influence over near term sentiment both in its own marketplace and in the underlying physical market. Ultimately, how the ship owning and physical chartering community view the latter will depend greatly on how responsibly the forward market players behave.

A lot of bull!

The expansion of the FFA market – and its ability to attract participants from outside shipping – has accompanied an unprecedented bull market in most of shipping and the dry bulk sector in particular.

2008 looks set to be an interesting year for both the shipping industry and the FFA market – not least because, globally, the risk environment seen in the early part of 2008 is not one that has been contemplated seriously for some considerable time. With the ‘credit crunch’, no one is yet clear as to whether the contagion has further to spread and to what extent all of this impinges and affects the ‘real economy’. However, it does bring financial risk management strategies – and protection market positions – to the fore.

Strategic precision required

The forward markets might form part of a risk management strategy but, while FFAs may be fashionable at present, this does not mean that players should enter this market based on little more than a whim. It is vital that physical market operators understand forward markets and that forward market ‘outsiders (traders, funds, banks, etc.) understand the fundamentals of the shipping market. Sound long-term judgements are always going to difficult to make when the immediate marketplace is febrile. Ill thought out strategies, however, could be catastrophic.

Understanding the physical shipping market

Drewry’s Report provides specific analysis of the bulk carrier and tanker markets in terms of trade volumes, fleet breakdowns, supply/demand fundamentals, freight rates, market player characteristics, market segmentation and transparency in the marketplace… all designed to enhance the understanding of market funadamentals.

Swaps and options

Derivatives take different forms and these are discussed in the Report particularly in terms of their perceived advantages and problems of pricing and transacting over the counter or clearing.

Forward trades

The Report also analyses the current focus of traded contracts and their role as part of a wider risk management regime.

For more information kindly visit: http://www.bharatbook.com/detail.asp?id=76725

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