Cleartrade Exchange and Drewry have today unveiled the World Container Index assessed by Drewry, a global index which can be used by physical and derivative market participants to manage freight risk.
The index will report individual market prices on major East-West container shipping routes. Initially prices for 11 individual routes and a composite index will be reported each week. These will cover trade in both directions between Asia, North America and Europe.
The index data will be generated by Drewry’s team of industry analysts from multiple market sources including carriers and intermediaries and published by WCI Marketing Services Ltd., a 50-50 joint venture with Cleartrade Exchange, the leading electronic marketplace for OTC freight and commodity swaps.
Drewry and Cleartrade Exchange believe that the new market price indices fill an important gap in the market, offering wide geographical scope as well as the inclusion of ’backhaul’ routes from an independent trusted research house.
Richard Baker, CEO of Cleartrade Exchange, said, “This is a big step forward for the container freight derivatives market, providing a robust set of indices on trade routes that reflect substantial physical volumes. We estimate the physical volume in 2010 on these 11 routes was 37m twenty-foot container moves. The potential for hedging and trading that freight risk is obvious.”
Philip Damas, Director- Liner Shipping and Supply Chains, Drewry, said, “The World Container Index assessed by Drewry brings a new level of depth and integrity to an emerging derivatives market that has huge potential for a number of participants along the trade chain. The extreme market volatility in the last three years and the shortcomings of the annual contract system have highlighted the need for greater predictability of container shipping rates and the need for hedging.”
Brian Nixon, President of the Container Freight Derivatives Association, said, “The CFDA welcomes the launch of the WCI assessed by Drewry and applaud this initiative to bring further liquidity to the container freight derivatives market. The association is on record as saying that its members support the development of new indices which are seen by the market to be fair, trustworthy and transparent. The development of these new indies by the WCI should bring new trading and hedging strategies along with increased liquidity to market participants wishing to manage their risk on a specific route and index."
The World Container Index assessed by Drewry will be available to all users of the container freight market including shippers, carriers, forwarders, banks, brokers and clearing houses. The index will be published weekly on Thursdays
