WCI Backhaul Routes Listed for Clearing

press release
Tuesday, March 06, 2012

Major boost for swaps liquidity as WCI backhaul routes are listed for clearing.
 

Introduction of clearing for new Europe-Asia routes will bring significant additional trading potential to container derivatives market. The World Container Index is pleased to announce that two WCI route assessments, covering Los Angeles to Shanghai and Rotterdam to Shanghai will now be cleared by LCH.Clearnet. The addition of clearing, which provides risk management for over-the-counter container freight swap trades, has been made in response to increased demand to manage freight price risk and reflects the growing market acceptance of the WCI.


Since launch in September 2011, the WCI has emerged as the preferred tool for pricing index-linked contracts in the physical container market while also providing the platform for hedging of exposure in the derivatives market.
WCI director Richard Heath said: “From its foundation, the World Container Index has been working closely with freight buyers and sellers to ensure that our products satisfy their needs for risk management. These first cleared contracts represent another step forward for the WCI and for the growing container freight derivatives market, helping to bring new solutions to a wider number of shippers, carriers and intermediaries.”
 

The contracts are similar to Asia-Europe routes already listed by LCH.Clearnet but differ in that WCI contracts are marked in FEU rather than TEU, to more accurately reflect the physical market. Contracts are settled monthly and initially will be available across the front three months, four quarters and front calendar periods. LCH.Clearnet director of freight and commodities Isabella Kurek-Smith, said: “LCH.Clearnet is delighted to clear these first WCI contracts, providing transparency and robust risk management for traders in the container swaps market. The growing demand for these new backhaul routes demonstrates that this is a market with considerable potential.”


Brokers in the Container Freight Swap Agreement (CFSA) market welcomed the develop as an important step in building trust and transparency in the WCI and delivering an additional layer of swaps market liquidity. FIS Container Swaps broker Steve Phillips said: “The listing of these contracts by LCH.Clearnet is a critical development for the container swaps market. Traders have been waiting for liquid contracts that complement the existing headhaul routes. These contracts bring their own unique opportunities for hedging and risk management and will provide a new impetus for increased swaps volume. The availability of these contracts, coinciding with the announcement by the WTSA, regarding the proposed GRI on westbound Pacific routes, highlights the benefits that container swaps can provide in managing volatility.”


Both the Los Angeles-Shanghai and Rotterdam-Shanghai contracts are classed as backhaul routes, with cargoes that are generally of lower value than the corresponding headhauls. The largest commodity groups include wastepaper, scrap metal, scrap plastic as well as agricultural commodities and chemicals, carried under a larger percentage of spot business than is typical on the Asia-Europe trade lanes. While freight rates on these routes are less volatile, market movements can be much larger in relative terms due to the low value of the freight and doubling of rates is not uncommon. Rates are driven by the availability of containers rather than vessel space, which makes rates less predictable and therefore highly suitable for hedging.
 

Maritime Reporter May 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Solarworld Wants Duties on Chinese Solar Goods in U.S. Extended

German solar manufacturer SolarWorld will apply to the United States for an extension of duties on Chinese panel imports that are due to end this year, weekly Euro am Sonntag said.

Sea Urchin Haven Disturbed by Oil Spill

Stephanie Mutz makes a living plucking sea urchins from the Santa Barbara coast and selling the prickly treasure to upscale restaurants in Southern California.

5 Tunisian Migrants Die in Shipwreck

At least five Tunisian migrants died on Saturday when their boat sailing to Italy capsized off the Tunisian coast, officials said. "A migrant boat carrying

Technology

U.S. Senators Urge Obama to Block Arctic Oil Drilling

A group of 18 mostly Democratic U.S. senators on Friday urged the Obama administration to stop Royal Dutch Shell's preparations for oil exploration in the Arctic,

Seaway to Receive Prestigious OECD Award

The St. Lawrence Seaway Management Corporation (SLSMC) announced today that it will receive a prestigious award from the Organization for Economic Cooperation

Torqeedo Introduces New Deep Blue Inboard

Torqeedo now offers a shaft drive version of its 40 and 80 horsepower Deep Blue motor. An electric drive designed for marine use from the ground up, the Deep Blue inboard shares the safety,

Finance

Solarworld Wants Duties on Chinese Solar Goods in U.S. Extended

German solar manufacturer SolarWorld will apply to the United States for an extension of duties on Chinese panel imports that are due to end this year, weekly Euro am Sonntag said.

Sea Urchin Haven Disturbed by Oil Spill

Stephanie Mutz makes a living plucking sea urchins from the Santa Barbara coast and selling the prickly treasure to upscale restaurants in Southern California.

Viking Orders 2 Liebherr Cranes

An LR 1300 with super lift equipment and an LR 1160 crawler crane will strengthen the fleet of Viking Cranes. The Tallinn-based company with branch offices

Container Ships

KPCT Launches New Gulf Service

Containerized volumes are steadily increasing on the East Coast of India. Keeping pace with the growth, Krishnapatnam Port Co. Ltd. (KPCT) now offers a new service to the Gulf sector.

Shipping Freight Rates Drop Amidst Overcapacity

Shipping freight rates on the world's busiest route, from Asia to Northern Europe, fell by the largest percentage amount since 2008, reflecting wild volatility

HSH Bank to Split Off Bad Shipping Loans

German lender HSH Nordbank could split off a "bad bank" for non-performing shipping loans as part of a plan to create a sustainable business model, according to a person familiar with the matter.

Software Solutions

LR Establishes Applied Technology Group

Lloyd’s Register establishes the Applied Technology Group, centered around the activities of Martec Limited   The Applied Technology Group (ATG) describes is

SSI to Showcase New Software at Nor-Shipping

SSI informs it will showcase the latest versions of its CAD/CAM software, ShipConstructor and EnterprisePlatform, at Nor-Shipping 2015, June 2-5. SSI CEO Darren

Globavista Launch Software Product Update

Globavista drives greater efficiency in vessel fleets by providing enhanced operational intelligence to fleet managers with new software product updates, the developer announced.

Logistics

Viking Orders 2 Liebherr Cranes

An LR 1300 with super lift equipment and an LR 1160 crawler crane will strengthen the fleet of Viking Cranes. The Tallinn-based company with branch offices

Red Tape, Industrial Relations Could Stifle LNG Potential

Australia could develop the world’s most technologically advanced LNG industry, according to a report by Accenture. But if industry is to reach its potential

KPCT Launches New Gulf Service

Containerized volumes are steadily increasing on the East Coast of India. Keeping pace with the growth, Krishnapatnam Port Co. Ltd. (KPCT) now offers a new service to the Gulf sector.

 
 
Maritime Contracts Maritime Standards Navigation Pipelines Port Authority Salvage Ship Repair Ship Simulators Shipbuilding / Vessel Construction Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1591 sec (6 req/sec)