Freight Futures Market May Affect Freight Shipping Rates
Unknown to most freight shippers is the freight futures market where companies can hedge against increases in freight rates. Analysts report that the activity on the Baltic Exchange’s Index (Dry) shows that investors and hedge funds are running to participate in these once obscure markets.
Ronald Willins, analyst of the FIS Freight Services, reports that “The freight futures derivatives market should continue to grow larger than the underlying freight market. Financial players want to exploit and profit from the growth of Asian markets, even in spite of America’s slowdown.”
The impact on domestic freight shippers could be felt as speculators on the freight futures derivatives markets could push pricing up for ocean freight, with a possible spillover into domestic LTL and Truckload freight rates.