The freight derivatives markets for both tankers and dry cargo vessels saw increased traded volumes in 2019 according to data released by the Baltic Exchange. Tanker Forward Freight Agreement (FFA) volumes were up 38% on the previous year, reaching 473,113 lots. Dry FFA volumes hit 1,632,773 lots, up 11% on 2018. One lot is defined as a day’s hire of a vessel or 1000 metric tonnes of ocean transportation of cargo.

Commenting on the figures, Baltic Exchange Chief Executive Mark Jackson said:

“2019 was another solid year for the freight derivatives market. Underpinning these volumes are both volatility in the freight markets and trust in the Baltic Exchange’s settlement data. Last year both the dry bulk and tanker markets experienced big swings, with issues ranging from the Vale iron ore disaster, attacks on tanker shipping in the Middle East and IMO2020 impacting sentiment.” 

2019 also saw the emergence of the first FFA trades in the LNG market.  Settled against the Baltic’s recently launched suite of assessments for gas shipping, the first LNG swap took place in July, with cleared trades following at the end of 2019 and open interest building.
 

Dry FFA Volumes

  Capesize Handysize Panamax Supramax Total
Lots Traded 2019 540,298 600 673,591 173,188 1,387,677
Lots Traded 2018 481,725 2,276 571,850 141,078 1,196,929
% by sector (2019) 38.94% 0.04% 48.54% 12.48%  

Option FFA Volumes

Lots Traded 2019 245,096
Lots Traded 2018 268,976

Tanker FFA Volumes

  Clean Dirty Total
Lots Traded 2019 173,172 299,941 473,113
Lots Traded 2018 117,706 176,823 294,529

The Baltic runs regular training courses on FFA trading. Click here for further details.