Building on successful operations in coal and other commodities, GFI launched a global freight derivatives desk in October 2004. The dry freight team works closely with other GFI commodities brokerage desks, in particular coal and iron ore, offering clients valuable insight into these interrelated markets. We believe GFI offers ship owners, charterers, energy companies and trading houses the ability to hedge and manage portfolio freight exposure more effectively, whilst at the same time, developing alternative trading strategies to physical hedging.

Key benefits offered by GFI Freight:

• Implied offering occasional lead indicator to freight
• Market liquidity
• Volume flexibility
• ‘Live’ screen pricing
• Clearing links
• Access to additional counterparties

SHIPPING ROUTES COVERED:

• BALTIC EXCHANGE CAPESIZE INDEX: Route C2, C3, C4, C5, C7, C12, C8 03, C9 03, C10 03, C11 03
• BALTIC EXCHANGE PANAMAX INDEX: Route P1A 03, P2A 03, P3A 03, P4 03
• BALTIC EXCHANGE SUPRAMAX INDEX: Route S1A, S1B, S2, S3, S4A, S4B
• BALTIC HANDYSIZE INDEX: HS1, HS2, HS3, HS4, HS5,HS6

IMPLIED FREIGHT VS FFAS

GFI has been broking coal derivatives since 2000, starting with the API 2 and API 4 contracts. There are now over 100 companies trading coal derivatives, which trade up to five years forward, with the opportunity to trade on a cleared basis.

• API 2 - A CIF ARA NAR 6000 KCAL/KG Coal Price
• API 4 - A FOB Richards Bay NAR 6000 KCAL/KG Coal Price

Through trading API 2 against API 4, GFI is able to obtain prices for synthetic freight for example by taking out the FOB element of the delivered prices represented in the API 2 contract. This synthetic or implied freight can then be traded on an outright basis and used to express opinions on the direction of the freight market. There are also possibilities to look at the arbitrage market between the BCI C4 freight contract and the implied freight markets.

GFI stands in the advantageous position of being able to offer its customers insight into the day-to-day pricing and opportunities offered by these two independent, but inter-related, markets.