Business | Shipping

Freight futures lose appeal

Freight derivatives are falling out of favour as traditionally conservative ship owners and brokers back out of the sort of speculation on volatile freight rates that has just claimed its highest-profile victim.

  • Reuters
  • Published: 23:51 December 21, 2008
  • Gulf News

Singapore: Freight derivatives are falling out of favour as traditionally conservative ship owners and brokers back out of the sort of speculation on volatile freight rates that has just claimed its highest-profile victim.

Speculative capital has evaporated, and the econ-omic crisis has sapped the bullishness that fuelled activity and led to heavy inflow of money from banks' proprietary desks and institutional investors into commodities up until earlier this year.

Fiasco

"The current fiasco will make more people examine speculating, taking big risks," said Jeffrey Landsberg, a freight options broker at Imarex in Singapore.

China's Cosco, the country's largest shipping group, last week disclosed 4 billion yuan ($585.3 million) potential losses on its freight hedging, making it the latest Asian firm to suffer from wild swings in derivative prices.

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