THE newly created freight derivatives and indices market on service contracts is to be discussed by the US Federal Maritime Commission (FMC) in a secret session.

    Proponents say freight derivatives provide a hedging buffer for shippers' at the mercy of rates and rising surcharges while critics say that indices act like a "casino" for the physical market.

    The use of Container Freight Derivatives in Container Freight Swap Agreements (CFSAs) and Container Freight Swap Options used by the recently launched Shanghai Containerised Freight Index (SCFI) can contain risks on future spot freight rates, and for financial investors, CFSA price movement is speculated for profit.

    The first US-based non-vessel ocean common carrier TBB Global Logistics has offered a CFSA to Kentucky-based ICAP Logistics, a unit of ICAP Energy, the commodity arm of interdealer broker ICAP plc.

   During the FMC session resolutions of shipper/carrier dispute and service terms will be discussed with open sessions to cover NVOCC tariff publication exemption and its detailed study on the use of slow-steaming on the supply chain.

   It will also cover a trade discussion on the movement of household goods, or personal property, on US-Foreign Ocean borne trades deemed potentially unlawful, unfair or deceptive.

(Source:http://www.schednet.com)