Shanghai launches mainland's 1st forward freight product

SHANGHAI Shipping Freight Exchange Co today started trading of the first forward freight agreement on China's mainland, with which cargo owners and shipping companies can hedge against fluctuating shipping rates. "The launch of the new derivatives is a key step to expand the shipping financing service in the city and an important driver for Shanghai to become an international shipping hub," said Zhi Guanglu, vice director of the water transportation bureau at China's Ministry of Transport. The exchange is the first of its kind on the mainland and provides forward freight contracts based on shipping rates on the Western American route and the European route. A forward contract allows a company to lock in rates for future deliveries. More derivatives that track the coastal dry-bulk transportation rates will be launched at the end of this year in Shanghai, according to the exchange.

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