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Freight Derivatives and Shipping Risk Management

March 9 @ 9:00 am - March 10 @ 5:00 pm

Shipping markets are becoming increasingly risky as fluctuations in freight rates and ship prices have increased substantially in recent years. This calls for prudent control of freight rates, ship values, bunker price, credit, foreign exchange and interest rate risks, which are all part of the shipping investment and day to day operating activities.

The aim of this innovative Shipping Risk Management course is to raise market awareness of risks involved in shipping businesses and how various physical and derivatives instruments can be used to control such risks efficiently and effectively.

The module is delivered over two days by experts in the areas of shipping and commodity risk management. Using a variety of real life examples, the course demonstrates how risk can affect cash flows from operating activities along with an in-depth analysis of theoretical and practical aspects of risk management instruments in shipping.

By attending this course participants will learn how to analyse and measure the impact of financial risks involved in shipping investment and operations, and how to select and execute effective strategies to minimise or eliminate such risks, stabilise their cash flow and maximise the return on investment more efficiently.


Day one

Introduction to shipping risk

– Types of shipping contracts
– Sources of risk in shipping
– Market segmentation and sectoral differences
– Comparison of risk across different shipping markets

A primer on risk management

– Introduction to derivative instruments
– Forwards, futures, options & swaps- Exchange-Traded vs Over-the-Counter- Credit risk and clearing

Freight rate risk management

– Freight market information
– The practicalities of FFA trading
– Documentation and settlement
– Electronic trading
– FFA and hedging examples for spot, time-charter & tanker routes
– Exercise on freight risk management

Freight rate options

– Option terminology
– Using freight options for hedging
– Option trading strategies
– Freight options pricing

Day two

Bunker risk management

– Bunker market fundamentals
– Importance of bunker risk management in shipping
– Use of bunker derivatives
– Forward bunker contracts: hedging and trading
– Options on bunker prices
– Exercise on bunker risk management

Financial risk management in shipping

– Interest rate risk
– Financing examples and sources of interest rate risk
– Instruments to manage interest rate risk
– Hedging interest rate risk using forwards and futures
– Interest rate caps, floors and collars
– Interest rate and currency swaps & swapations

Case study on shipping risk management

– Integrating all aspects of shipping risk
– Presentation of the case
– Using spreadsheets to solve the case
– Discussion

Ship price risk management

– Portfolio theory
– Diversification and risk-return optimisation
– Baltic Sale & Purchase Assessment, Baltic Demolition Assessment, Sale & Purchase Forward Agreements

Value at Risk (VaR) in shipping

– Estimating volatility – daily vs yearly
– Measuring and estimating VaR: single asset vs multi-asset portfolio
– VaR methodologies
– Examples of estimating VaR of FFA portfolios

Credit risk in shipping

– Probability of default vs loss given default
– How to measure credit risk: qualitative vs quantitative methods
– Credit risk and credit ratings
– Credit risk measurement in shipping
– Credit derivatives and credit risk management in shipping


Course leaders

 Prof. Amir Alizadeh and Prof. Nikos Nomikos of Cass Business School, are both internationally recognised academics in the fields of shipping and commodity finance, and risk management. Their theoretical and applied research work has been published in leading academic and professional journals and they also provide consultancy services to the industry on different aspects of commodity and shipping risk management.


£1575 + VAT (where applicable)



Contact Shena Cheng to book your place. Email: scheng@navigatepr.com

To view the full 2020 Baltic Exchange Academy Programme,  click here


March 9 @ 9:00 am
March 10 @ 5:00 pm
Event Category:


The Baltic Exchange
38 St Mary Axe
London, EC3A 8BH United Kingdom
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