Freight trading all set to go future in India

A ship loaded with cargo docking on shore might soon turn out to be an investor’s dream come true. After mutual funds, stocks and commo...

A ship loaded with cargo docking on shore might soon turn out to be an investor’s dream come true. After mutual funds, stocks and commodities, futures trading in freight could be the next big thing.

Freight futures — internationally operated since 1985 — is now open to Indian investors. Based on a collaboration inked between Multi Commodities Exchange (MCX), Mumbai and the Baltic Exchange, London new indices will be established where Indian shipping community, traders and investors can benefit.

‘‘Freight futures trading is simple. Between two traders, commodity price can be always ascertained in future. But transport freight, can never be known due to its volatility. It is here where the freight futures trading will help traders hedge risks,’’ says Peter Kerr-Dineen, Chairman of Baltic Exchange.

The regular freights running on shipping routes are converted to form an index — assessment of price of moving raw material—which forms the basis for future trading. In India, the M- E to Singapore and Indo- Aussie routes will be taken as the reference points.

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