Theory and Practice of Shipping Freight Derivatives

Financial Risk Management

Theory and Practice of Shipping Freight Derivatives Prof. Manolis G. Kavussanos; Dr. Ilias D. Visvikis

Risk Books February 2011

Specifications

ISBN-13
9781906348489
Publisher
Risk Books
Publication
February 2011
Format
Paperback
Jurisdiction
International ? Countri(es) for reference only

Details

Theory and Practice of Shipping Freight Derivatives provides practical coverage of shipping freight rate derivatives, detailed by leading expert practitioners in the field, offering best practices from divergent and different points of view.

This book is an essential purchase for all members of the shipping and financial communities. The book will also be required reading for academics and students of maritime or transportation-related university programs.

As an inherently volatile industry, shipping is characterised by a high risk-high return profile, making its rates and prices difficult to forecast, and as a consequence business projects less accurately budgeted. Thus, the identification and management of any such business risks is imperative. This can make the difference between success or failure when contending with the adverse price movements of the market, and the intense competition which exists in this global industry.

Freight rates and their fluctuation constitutes the most significant source of business risk. Its increasing recognition has brought with it a significant amount of derivative products, which have begun to offer more effective, flexible and cheaper ways to manage risk. This has become particularly pertinent following the global financial crisis. The book provides practical coverage of shipping freight rate derivatives, detailed by leading expert practitioners in the field, offering best practices from divergent and different points of view.

Chapters, among others, include:

. The Structure of the Freight Derivatives Markets

. Credit Risk and the Benefits of Clearing Services

. The Shipowner’s and Charterer’s View and Practice of Freight Derivatives

. The Bankers’ Perspective of Freight Derivatives

. Accounting and Tax, perspectives

. Setting up a Freight Rate Risk Management Department

Table of Contents

1. Introduction to the Theory and Practice of Shipping Freight Derivatives

Prof. Manolis Kavussanos, Athens University of Economics and Business

Dr. Ilias Visvikis, ALBA Graduate Business School

2. The Structure of the Freight Derivatives Market

Alex Gray and Janet Sykes, Clarksons Securities Limited

3. The Role of the Baltic Exchange in the Freight Derivatives Market

Jeremy Penn, the Baltic Exchange

4. Credit Risk and the Benefits of Clearing Services in Freight Derivatives

Isabella Kurek-Smith, LCH.Clearnet

5. The Shipowner’s View of Shipping Freight Derivatives Trading

Demetris Nenes, OceanFreight Inc.

6. The Charterer’s View of Freight Derivatives

Stefan Albertijn, Baltic Exchange Freight Market Information Users Group

7. Forward Freight Agreements – The Brokers Perspective

Duncan Dunn, SSY Futures Ltd.

8. The Banker’s View in Freight Derivatives

Alex Orfanidis, ABN AMRO Bank N.V.

9. The use of Technical Analysis in FFA trading

Georgi Slavov, ICAP Plc.

10. Accounting and Tax Issues in Freight Derivatives

Vassos Vrachimis, PricewaterhouseCoopers LLP

11. Legal Framework of Freight Derivatives

Damian Honey and Andrew Johnston, Holman Fenwick Willan LLP

12. Electronic Trading Software Needs

Michael Lolk Larsen, Triple Point Technology

13. Setting up a Freight Derivatives Desk

Stephanos Pissis, Statoil ASA

About the Author

Professor Manolis G. Kavussanos is a faculty member of the Athens University of Economics and Business (AUEB), Greece. He is the Director of the MSc and PhD programs in Accounting and Finance and of the Research Centre for Finance at AUEB.He holds a BSc and MSc (Economics) from London University and a PhD (Applied Economics) from City University Cass Business School (Cass), London.

He launched and directed the MSc in Trade, Logistics and Finance at Cass until he joined AUEB. He has held various posts as professor of finance and shipping in universities in more than eight countries around the globe.

He has written extensively in the areas of finance, shipping and applied economics and has been the author of numerous pieces of academic work published in top international refereed journals, in conference proceedings and books. This work has been presented in international conferences and professional meetings around the world, gaining awards for its quality, being sponsored by both public and private sector companies and being cited extensively by other researchers in the area.

Since 1992 he has worked in developing the area of risk analysis and management in shipping and is the author of the unique and most comprehensive book on risk management and derivatives in shipping

Dr. Ilias D. Visvikis is the academic director of the MBA in shipping programme at ALBA Graduate Business School in Greece, an associate professor of finance and the director (in Greece) of the MSc in international shipping and finance programme, which is offered by the ICMA centre at Henley Business School, University of Reading and ALBA. He has lectured in several universities and his research work has been published in academic journals and practitioner magazines as well as being presented extensively in international academic and business conferences around the world.

Ilias co-authored the book Derivatives and Risk Management in Shipping. He has held posts in the Central Securities Depository of Greece and in the derivatives market of the Athens Exchange, and has an extensive experience in consultancy and executive training services in the area of risk management in shipping.

He holds a BSc in business administration from the University of Aegean (Greece), an MSc in international financial markets from the University of Southampton, an MSc in international shipping from the University of Plymouth and a PhD in finance from Cass Business School.

Reviews

“Bulk ocean shipping is often characterized as commodity-like with similar pricing patterns and trading dynamics. It is a fragmented industry where the collective daily decisions and actions taken by thousand of owners, charterers, cargo suppliers, receivers and bankers cumulatively effect and create its volatile nature. Once again the authors advance the understanding of this dynamic, challenging and fascinating industry.”

Michael E. McClure, Executive Vice President, Navios Maritime Holdings, Inc.


"In the highly volatile shipping market, where freight derivatives are of paramount importance, Professor Kavussanos and Dr. Visvikis are, once again, breaking new ground. This book combines, in an ideal way, the theory and the educational approach with practical guidelines.

Not only does it captivate the essence of hedging, but it also offers to the reader the experience of leading expert practitioners.

It will, definitely, contribute greatly to the better understanding, administering and implementation of shipping freight derivatives."

George Skrimizeas, General Manager, ALLSEAS MARINE S.A


"With the shipping freight derivatives industry having experienced significant development and extreme volatility since the days of Biffex, education is still of paramount importance both in the academic area and the industry as a whole. This book stands out, having leading practitioners sharing their experience and providing valuable insight into the fundamentals applied in the field. A recommended read for anyone seeking deeper understanding of the practical application of shipping freight derivatives!"

Ola Strand Andersen, Managing Director, Imarex Asia Pte Ltd

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