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 October 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Sapurakencana Wins 3 Petronas Oil blocks

SapuraKencana Petroleum Berhad today announced that it has entered into Sale and Purchase Agreements to acquire the entire interest of PETRONAS in 3 blocks offshore

Kemp Succeeds Semple at Wood Group

Wood Group announced following changes to its senior management team. Alan Semple, chief financial officer (CFO) has advised the board that he intends to

ST Engineering Rejigs Top Deck

Singapore Technologies Engineering Ltd (ST Engineering) today announced the appointment of senior management personnel to new key management positions in the

Technology

Sapurakencana Wins 3 Petronas Oil blocks

SapuraKencana Petroleum Berhad today announced that it has entered into Sale and Purchase Agreements to acquire the entire interest of PETRONAS in 3 blocks offshore

Time-out for Kwanza Drilling

Statoil has decided to cancel the Stena Carron rig contract after fulfilling the work commitments in the Statoil-operated blocks 38 and 39 in the Kwanza basin offshore Angola.

Maritime Reporter @ 75: The Daily Cartoon

Maritime Reporter & Engineering News was founded by John J. O'Malley (1905-1980) in 1939, and today ranks as the world's largest audited trade publication in the world serving the maritime industry,

Finance

ST Engineering Rejigs Top Deck

Singapore Technologies Engineering Ltd (ST Engineering) today announced the appointment of senior management personnel to new key management positions in the

MHI Receives "Best IR Award"

Mitsubishi Heavy Industries, Ltd. (MHI) has received one of this year's "Best IR Awards" presented annually by the Japan Investor Relations Association (JIRA).

Houston Port Commission Approves budget

The Fiscal Year 2015 Operating and Capital Budget was approved Thursday during a special meeting of the Port Commission of the Port of Houston Authority.   Projections

Container Ships

Sea Star Line: Equipment Replacement Plan on Track

Company Receives New Refrigerated Containers and Places Order for New Genset Equipment   Sea Star Line, LLC began receiving the first of its new 100 40’ and 45’

October Imports up 9% at Port of Oakland

Containerized imports shipped through the Port of Oakland were up 9.17% in October from a year ago, the port said, citing the surge as the biggest jump in import cargo volume in six months.

Video: Reefer RoRo Ship Design Rebooted

Expanding on the Reefer RoRo Ship design release in September last year, naval architects group Knud E. Hansen A/S has continued the development of the new Reefer RoRo Ship design with version II.

Software Solutions

Transas Launches Web Map Service

Transas Marine has launched Transas Web Map Service (WMS)to provide transparent and easy access to navigation charts through common interface. Access to comprehensive

ClassNK-NAPA GREEN Wins IBJ Awards

Vessel performance monitoring and optimization solution ClassNK-NAPA GREEN was named the maritime industry’s top IT system by earning the IT Solutions Award

Wison Selects AVEVA to Support Offshore Projects

International EPC firm chooses AVEVA software, replacing competitive solution, to increase productivity and efficiency on offshore projects.   AVEVA has announced that Wison Offshore & Marine,

Logistics

ST Engineering Rejigs Top Deck

Singapore Technologies Engineering Ltd (ST Engineering) today announced the appointment of senior management personnel to new key management positions in the

October Imports up 9% at Port of Oakland

Containerized imports shipped through the Port of Oakland were up 9.17% in October from a year ago, the port said, citing the surge as the biggest jump in import cargo volume in six months.

Cost to Fuel Ships Falls

For a ship that burns 24 tonnes of fuel per day while steaming, fuel costs are reduced by as much as $1 million a year if current price level stay put. Assuming

 
 
Maritime Contracts Maritime Security Naval Architecture Navigation Offshore Oil Pipelines Port Authority Ship Repair Ship Simulators Winch
rss | archive | history | articles | privacy | terms and conditions | 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: 0.1651 sec (6 req/sec)