- Baltic Exchange and Freightos to launch global container freight index
For the first time ever the global container shipping industry will have an independent, audited benchmark thanks to an innovative tie-up between the Baltic Exchange, the most trusted name in freight benchmarking, and Freightos, the digital container freight platform.
The two organisations today (25 April) announced at Singapore Maritime Week that the Freightos International Freight Index, which reflects weekly spot rates for 40-foot containers based on 12 to 18 million price points collected every week on 12 main shipping trade lanes, will be audited by the Baltic Exchange and republished as the Freightos Baltic Indices. This will also include a new headline index – the FBX Global Container Index (FBX) – a weighted average of the 12 underlying route indexes, while setting the stage for derivative financial instruments in the future.
The world’s manufacturers, distributors and retailers, and logistic services providers, will for the first time be capable of managing ocean freight rate volatility
The Baltic Exchange already provides daily assessments for the dry bulk, tanker and gas freight markets which are used widely in both the physical shipping markets and to settle Forward Freight Agreements (FFAs). Freightos market intelligence, fed by the world’s largest freight rate database, is used by logistics services providers and supply chain organisations alike.
The Baltic Exchange is a trusted and independent body with a 274-year track-record of providing services to the bulk shipping industry and financial services, and a highly experienced manager of a diverse range of assessments for the maritime markets, backed by the Singapore Exchange (SGX), Asia’s leading and trusted market infrastructure and one of the world’s great derivative exchanges.
Announcing the partnership, Baltic Exchange Chief Executive Mark Jackson said:
“Baltic Exchange benchmarks are already widely used as settlement mechanisms in the derivatives and physical markets for billions of dollars-worth of bulk freight transactions. Our products have allowed shipowners, charterers and traders to manage the volatile business of moving bulk commodities by sea. We comply with the standards set by International Organization of Securities Commissions (IOSCO) and have been publishing data since 1985. By offering our robust auditing methodology to the FBX, we hope to provide the framework for the container shipping industry to develop sophisticated risk management tools.”
Freightos Founder and CEO Zvi Schreiber said:
“This exciting endeavour means that the world’s manufacturers, distributors and retailers, and logistic services providers, will for the first time be capable of managing ocean freight rate volatility. Our technology and massive database of multimodal freight rates already power both market intelligence and real-time freight booking and management for over 1,000 carriers and forwarders, as well as over 3,000 shippers. We’re incredibly proud to drive more efficiency to the container freight market, cannot think of a stronger partner than the Baltic Exchange and the Singapore Exchange, and are looking forward to the future financial instruments that this index unlocks.”
The FBX represents ocean freight prices, including all ocean surcharges (BAF, CAF, SCS, PCS, PSS, WRS). Market intelligence on port and inland charges are available separately. FBX is published weekly on Sundays and represents the price of the previous week (Sunday through Saturday). Prices used in the index are rolling short term Freight All Kind (FAK) spot tariffs between carriers, freight forwarders and high-volume shippers. Index values are calculated by taking the median price for all prices on active lanes with weighting by carrier. 50 to 70 million price points are collected every month.
FBX Global Container Index covers the following shipping lanes:
FBX01: China/East Asia to North America West Coast
FBX02: North America West Coast to China/East Asia
FBX03: China/East Asia to North America East Coast
FBX04: North America East Coast to China/East Asia
FBX11: China/East Asia to North Europe
FBX12: North Europe to China/East Asia
FBX13: China/East Asia to Mediterranean
FBX14: Mediterranean to China/East Asia
FBX21: North America East Coast to Europe
FBX22: Freightos Europe to North America East Coast China/East Asia
FBX24: Europe to South America East Coast
FBX26: Europe to South America West Coast
FBX is based on aggregated and anonymised real-time data from global carriers, forwarders and shippers that offer services on Freightos.com or use the Freightos AcceleRate freight rate management platform and have consented to this usage. Freightos.com is the digital platform for international freight which allows shippers to instantly compare and book freight quotes for air, ocean and truck movements, while managing shipments online. Freightos also provided automation and online sales channels for both carriers and forwarders.
FBX data will be available to subscribers on the Baltic Exchange website, via the Freightos website and on Thomson Reuters Eikon screens.
- Baltic Exchange launches Escrow Service for vessel sales
The Baltic Exchange will be launching an Escrow Service for its members to hold deposits for ship sale transactions. The move will allow Baltic Exchange members to take advantage of the Exchange’s trusted position in the marketplace when undertaking the sale or purchase of a vessel.
Announcing the initiative today (25 April) at its Freight & Commodities Forum during Singapore Maritime Week, the paid-for service will be available for use in transactions where the buyer of the vessel is a Baltic Exchange member. The service is likely to be extended to disputes related payments.
The Escrow Service will be run by the Baltic Exchange’s Asia office in Singapore and will be subject to the Singapore Exchange’s (SGX) detailed compliance and money laundering procedures. OCBC Bank will be providing the joint deposit account.
Headed up by the Baltic Exchange’s Head of Asia-Pacific, Chris Jones, a sale & purchase broker with over 40 years of experience, the service will initially be offered from Singapore with a view to further expansion to other Asian shipping centres.
Chris Jones said:
“Having the Baltic Exchange provide this service solves the problem as to where the deposit should be held in a vessel transaction. Buyer and seller alike can be certain that the Baltic Exchange will apply its high standards of compliance as well as have a full understanding of the complexities of any maritime transaction.”
“This service will add real value to the many sale & purchase brokers who are Baltic members and are currently expected to provide this service to clients. It will allow them to undertake the highest level of due diligence and compliance checks, reduce the administrative burden of organising a client escrow account and allow them to focus on adding value to the transaction.”
The service will go live in May 2018 and will cost US$ 5,000 per side.
- Baltic Exchange sets out modernised Code for freight market
The Baltic Exchange will be introducing a modernised code of conduct for shipowners, charterers and shipbrokers using the physical shipping and freight derivatives markets.
Following a detailed review of the current arrangements led by law firm Norton Rose Fulbright with oversight by the Baltic Exchange Council and the Baltic Membership Council, the New Baltic Code has been drafted to bring together a set of principles and business practices which will be applicable to not only Baltic Exchange members, but also the wider market. There is a greater focus on fairness & competition, anti-bribery & corruption and benchmarking related issues than before.
Explaining why the Baltic Exchange has updated its Code and detailing the new arrangements at Singapore Maritime Week, Baltic Exchange Chief Executive Mark Jackson said:
“Times have changed and Baltic Exchange members are operating in an environment with a greater focus than ever before on compliance. Shipping cannot expect to escape the heightened political and regulatory scrutiny that has been placed on the commodity markets since the 2007-2009 global financial crisis. By introducing this new code of conduct, we want to preserve confidence in and the integrity of the physical freight and freight derivatives markets; eliminate poor practices and raise standards across the entire market as well as increase the attractiveness of doing business with Baltic Exchange members.”
The New Baltic Code will be binding on members of the Baltic Exchange and members will be expected to promote compliance amongst all market participants. Members of the Baltic Exchange will be expected to refrain from doing business with counterparties who deliberately refuse to adhere to the principles and good practice standards set out in the New Baltic Code.
The New Baltic Code is based on the following principles:
Integrity of Markets
Market Participants shall act to uphold the integrity of the physical freight and freight derivative markets and avoid any action or omission that may adversely affect these markets or bring the Baltic Exchange and its membership into disrepute.
Fairness and Competition
Market Participants shall treat their customers fairly, compete fairly and avoid anti-competitive agreements and practices.
Ethical Business Practice
Market Participants shall do business in an ethical manner, eschew corrupt practices and comply at all times with applicable laws on money laundering, sanctions and tax evasion.
Good Market Conduct
Market Participants shall comply with applicable laws in respect of their activities in the freight and freight derivative markets, maintain authorisations and permissions to undertake regulated activities and devote due skill, oversight and resources to these activities.
Accurate and Credible Benchmarks
Members contributing data to the Baltic Exchange benchmarks shall comply at all times with applicable law and the Baltic Exchange Guide to Market Benchmarks. Market Participants using these products shall comply with applicable laws and terms and conditions under which the Baltic Exchange provides these products and at all times respect the rights of the Baltic Exchange in respect of these products.
The New Baltic Code contains detailed examples of good and bad practices and includes new sections covering competitive activity and ‘know your counterparty’ procedures.
The New Baltic Code is currently being reviewed by the Baltic Exchange Council and will be published later this year.
- Baltic Exchange Panellist Brokers enter into charterparty management discussions
The Baltic Exchange has entered into discussions with a group of Dry Panellist Brokers with the aim of jointly developing a charterparty and recap tool for the dry bulk market. The goal is for the Baltic Exchange and Panellists to work together and produce an industry standardised recap manager and charterparty editor.
The Baltic Exchange Recap Manager (BERM) concept was presented at a meeting with representatives of a group of Baltic Exchange panellists on 21 March in London. Commenting on the discussions, Baltic Exchange Chief Executive Mark Jackson said:
“We’ve been looking at the post trade space for 12 months and after consultation with our members and panellists, the area of contract management was highlighted. Our joint aim is to develop a broker-centric product that will be adopted by the market. Contract management systems can maximise efficiency and accuracy in contract production and is a key service Shipbrokers provide to their customers. The Baltic is partnering with Chinsay as its technology provider – with this arrangement in place we can build on Chinsay’s existing charterparty management system, which is used by many of the major principals and shipbroking companies.”
ACM Braemar, E A Gibson, Howe Robinson and CSBL members; Arrow Shipbroking Group, Barry Rogliano Salles, Hartland Shipping Services, Ifchor and Thurlestone Shipping, have agreed to explore this project further with the Baltic Exchange. A working group will look at the possible structure of an agreement and scope the system’s functionality.
- Last chance to buy Chairman’s Cocktail Party tickets
Baltic Exchange members are invited to join us for an evening of champagne, canapes and networking at the Baltic Chairman’s Cocktail Party, 9 May (1830 to 2030) at London’s Christchurch, Spitalfields.
The evening is always the highlight of the Baltic Exchange calendar and sees members from London and around the world renew old friendships and make new contacts.
Subsidised tickets are priced £35 + VAT.
All Baltic Exchange members and their guests are welcome.
Book your ticket today to avoid later disappointment.
LAST FEW TICKETS STILL REMAINING.
You’ll be in good company
Members from the following companies have already confirmed their attendance:
A.M. Nomikos, Alansons Shipping, Argus Media, Arrow, Ashley Shipping, BACA, Bancosta UK, Birketts,Braemar ACM Shipbroking, BRS, Chios Navigation, Clarksons Platou, E.A. Gibson, ED&F Man Shipping, Eniram, Foresight, Frank-Symons, Furness Withy (Chartering), GARD, GFI, Harrods Aviation, Hartland Shipping, Holman Fenwick Willan, Howard Houlder, Howe Robinson, ITIC, Maersk, Maritime Strategies International, Mavega Group, Mitsui OSK Line, MMAA, Pacific Basin, Quantum Shipping Services, RB British Marine, RB Shipping, Rigel Shipping, Shyvers Savoy Shipping, SSY, Stone Chambers, The China Navigation Company, Thomas Cooper, Thomas Miller, Thomson Reuters, Thurlstone Shipping and more………
- Turning climate words into action
Critics of the shipping industry’s work to mitigate the pressing issues of climate changes and its effects could find themselves being left with egg on their faces thanks to the outcomes of the International Maritime Organization’s (IMO) latest session of its Marine Environment Protection Committee (MEPC), held at the IMO’s headquarters in London from April 9 to 13. Attended by over 100 IMO Member States, the 72nd session of the committee’s (MEPC 72) main takeaway was the adoption of an initial strategy that aims to lower vessels’ greenhouse gas (GHG) emissions by at least 50% by 2050, in comparison with 2008.
The roadmap’s goal, according to the IMO, is to phase out GHG emissions from world shipping “as soon as possible” in the 2000s. The strategy’s 2050 objective stands alongside an aim to pursue efforts towards entirely phasing out these sorts of emissions. The plan also contains a specific reference to “a pathway of carbon dioxide emissions-reduction consistent with the Paris Agreement temperature goals”.
However, the strategy wasn’t the only result of MEPC 72. The committee’s other work included adopting International Convention for the Prevention of Pollution from Ships (MARPOL) amendments concerning Energy Efficiency Design Index (EEDI) requirements for both ro-ro cargo and passenger vessels, and approving draft MARPOL Annex VI amendments banning carriage of non-compliant fuel oil for combustion for propulsion/operation on board ships. MEPC 72 also approved guidance regarding best practice, for fuel oil purchasers/users, for assuring the quality of fuel oil used on vessels; adopted amendments for the implementation of the International Convention for the Control and Management of Ships’ Ballast Water and Sediments (Ballast Water Management, or BWM, Convention) as well as amendments to the BWM Convention itself; approved the data-gathering and analysis plan for the experience-building stage associated with the BWM Convention; approved BWM-related circulars; considered the development of measures to decrease risks of using and carrying heavy fuel oil, as fuel, by vessels in the Arctic; agreed to include a new agenda output to tackle marine plastic litter from shipping; and agreed to include a new output on review of resolution MEPC.207(62) (the 2011 Biofouling Guidelines) on the Sub-Committee on Pollution Prevention and Response’s (PPR Sub Committee) post-biennial agenda.
Slow movement criticised
INTERCARGO welcomed the committee’s “landmark” strategy for lowering vessels’ GHG emissions, but said that although the IMO was first to tackle these emissions by adopting technical and operational ship requirements, with worldwide application — as early as 2011 — the “regional and insufficient thinking outside the IMO framework” that had occurred since then was “disappointing”. It also noted that the process of agreeing a GHG-decrease plan at the IMO “is not an easy task”, alongside calling for IMO member states’ representatives to consider the safety and practical issues impacting vessels and any possible effect of commitments on world trade.
There’s less ability for owners to push back on things like emissions and carbon control because there’s a global movement to improve that
“The ambitious objectives that have been set will require adequate technological solutions, as our association has argued many times thus far,” INTERCARGO said. “GHG emissions largely depend on the design and the technology of the constructed ships, their engines and machinery, and the fuels used for propulsion. Shipowners are the users of the ships and the technologies they feature, as made available by shipbuilders and manufacturers, and utilise the fuels made available by suppliers. Another critical aspect is that very often it is the charterers who have the responsibility about how vessels are utilised. Yet, it is certain that our members — the dry bulk shipowners — will embrace and fully support any competitive technological solutions with better GHG footprint that will be made available to the market, as they have done in the past.”
Drewry associate and dry bulk specialist Susan Oatway commented on the IMO’s announcement regarding carbon-reduction plans by noting the uncertainty at play regarding shipowners’ responses to IMO meetings.
“I think with all of this, we just don’t really know how owners are going to react to any of the IMO sessions. There’s already been pushback from owners on the ballast water directive. This time last year, we thought that was going to have quite an impact on all parts of the dry cargo market, but it hasn’t, because owners have pushed back significantly. There’s less ability for owners to push back on things like emissions and carbon control because there’s a global movement to improve that.”
BIMCO chief shipping analyst Peter Sand described the 50% agreement is “historic”.
“What the agreement essentially does is to deliver within the framework of the Paris Agreement,” he said. “Shipping has done that now. The subsequent demand side impact on dry bulk shipping thus depends on the use of fossil fuels in the world as such. Coal is a key cargo, but so is iron ore due to the energy-intensive steel production. Also, if the world is to deliver within the Paris Agreement, shipping of fossil fuels is likely to get affected. The real impact will depend on development of GHG-abatement technologies. For the shipping industry, we now face a real challenge. In BIMCO, we believe that the industry can deliver on this target — even if we don’t exactly know how yet.”
With MEPC 72 having committed to at least halving total annual GHG emissions by 2050 and having taken action on a series of other environmental issues affecting shipping, the IMO has taken considerable strides towards offsetting the impact of shipping on the world around it. However, action regarding MEPC 72’s GHG-decrease plan needs to occur to ensure that shipping no longer counts for nearly 3% of world GHG emissions and that its contribution doesn’t rise further.
- Member Update
The following individuals have applied for Membership of an existing member company:
Individual Company Mr I Papadimitriou Affinity (Shipping) LLP Mr C M Beckett Denholm, Coates & Co. Ltd Captain A Srivastava Scorpio Commercial Management SAM
Any comments should be passed to Karen Karanicholas by 2 May 2018.
- Ship Finance Executive – places available
There are still places available on the Baltic Exchange’s Ship Finance Executive training course (London 14-15 May).
Led by Professor Nikos Nomikos and Dr Nikos Papapostolou of Cass Business School, course participants will learn how an IPO is made, what to look for when choosing an underwriter, how to identify an underpriced IPO before it is made public using only publicly available information, how to issue a high yield bond and how to calculate the probability of a high yield bond default. The course also provides practical analysis of company valuations using different methodologies.
See www.balticexchange.com/other-services/training-2/ship-finance-executive for full details, including booking.
- Anyone for tennis?
On 27 June the Baltic Exchange will be holding the annual Fehr Cup at Surbiton Racket & Fitness Club.
The event is open to 20 pairs of competitors, with all levels of ability welcome to attend. A buffet lunch in the clubhouse overlooking the grass courts will be provided, as well as strawberries and cream and afternoon tea.
Entry, including lunch and refreshments, is £70 per pair.
For more details, please email:
Catharine Bacon – email@example.com
Perry Perera – firstname.lastname@example.org
- Baltic Exchange and ICS Lunchtime Lectures
The Baltic Exchange and Institute of Chartered Shipbrokers series of bi-monthly lectures returns to Shanghai, Singapore, Athens and London on 30 May.
Money Walks / Money Talks – A masterclass in the hedging and financial instruments used by shipping principals will be the theme in Singapore, London and Athens with guest speakers as followed:
Singapore: Raghu Raghunath,
Former Head of Noble Chartering Ltd
London: John Banaskiewicz, MD,
Freight Investor Services
Athens: Katerina Stathopoulou,
Executive Director, Investments & Finance
In Shanghai, the focus will be Shipping Supply-Demand Dynamics. The seminar, with guest speaker still to be confirmed, will examine the economic factors that have caused the major changes in shipping rates over the past 12 months and look into what is anticipated to cause the most impact on freight markets throughout the remainder of 2018.
The lectures are free to Baltic and Institute Members, with non-member prices as followed:
£100 London / SG$100 Singapore /
¥500 Shanghai / €100 Athens
Light lunch included
Attendees must register by email to email@example.com using the appropriate reference code below:
BXICS05L (London)/ BXICS05SG (Singapore)/ BXICS05SH (Shanghai)/
To view the flyer, click here.
- Book Now For Baltic Risk Forum At Posidonia
Bookings are now being taken for the Baltic Exchange’s Risk Forum at Posidonia.
Focusing on the issue of risk in the freight and shipping markets, the challenges and opportunities that these can present and what is available to help members manage their exposure, the programme will include:
- An A, B, C (and D & E) of how the Baltic helps members manage risk – Mark Jackson, CEO, Baltic Exchange
- A Perfect Match? Physical Indexation and the FFA Market – Duncan Dunn, Director, SSY Futures
- BDRY ETF: Democratizing Investing in Shipping – John Kartsonas, Managing Partner, Breakwave Advisors
- What are the Commercial Implications of the 2020 Sulphur Cap? – Panel Discussion
Further speakers and topics will be announced in the coming weeks.
The event takes place at the Yacht Club of Greece, 4 June (Forum 1100-1330, followed by lunch).
Click here to register your interest in attending.
- HRH Princess Anne attends Mission to Seafarers lunch
The Baltic Exchange welcomed a very special guest on Wednesday (25 April), HRH Princess Anne, who attended a Mission to Seafarers lunch held in the Baltic boardroom.
The lunch aimed to inform and update senior executives in the industry of the Mission’s global work, in addition to informing attendees of new and exciting developments at the charity.