WHAT ARE FREIGHT SWAPS?

Freight Swaps was originally designed as a hedging tool for dry cargo such as coal and coffee. However, Ginga created freight swaps for oil transport in Asia to compliment its oil derivative broking and started broking freight for tanker rates in 2000.The demand for freight swaps in energy trading has grown significantly over the years as the tanker freight market is volatile.

Participation of petroleum traders and banks in addition to charterers and ship owners in this market enhances liquidity. Thus, the freight swaps market has quickly evolved into a more sophisticated tool that is used to manage freight risk as well as cargo pricing on physical and paper.

Trading Freight Swaps

Ginga brokers swaps for both clean and dirty tanker freight. Our products and contract sizes are as follows:

Clean tanker freight:

• SG/JP 30KMT
  Volume per contract = 10,000 Metric Ton, flat Singapore/Chiba
  Index: Platts clean tanker rate assessment
  
  
• AG/JP 55KMT
  Volume per contract = 10,000 Metric Ton, flat Ras Tanura/Yokohama, Index: Platts tanker rate assessment
  
  
• AG/JP 75KMT
  Volume per contract = 10,000 Metric Ton, flat Ras Tanura/Yokohama Index: Platts tanker rate assessment

Dirty tanker freight:

• AG/JP VLCC
  Volume per contract = 20,000 Metric Ton, flat Ras Tanura/Chiba
  Index: Baltic International Tanker Rate
  
  
• AG/SG 80kmt
  Volume per contract = 20,000 Metric Ton, flat Kuwait-Singapore
  Index: Baltic International Tanker Rate

Please note that volumes are standardised but can be tailored to suit your requirements.

There are 3 basic categories of trading freight swaps:

• Outright
  
  
• Inter-month Spreads
  A hedging tool to enable traders to lock in the price differentials between the same product but different months.
  
  
• Inter-product Spreads

A hedging tool to enable traders to lock in the price differentials between two products. Ginga deals in tanker freight exchanges between MR/LR1, MR/LR2, LR1/LR2 and to a certain extent, LR/VLCC.

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