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Newly launched S&P GSCI Freight Index Series dry bulk performance benchmarks expand S&PDJI’s suite of single-commodity indices
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S&P GSCI indices combine into a single suite performance benchmarks for the Capesize and Panamax vessels that serve the dry bulk markets
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Creation of the S&P GSCI indices aims to fill a market gap in the global supply chain industry
S&P Dow Jones Indices has launched the S&P GSCI Freight Index Series, a new set of dry bulk performance benchmarks that expands S&PDJI’s suite of single-commodity indices.
The S&P GSCI Freight Indices provide transparent, reliable and publicly available performance benchmarks for the dry bulk markets, London-based S&PDJI’s said in a press release on launching its new commodity tracker on August 4.
Dry bulk commodities are raw materials that are shipped in bulk for global manufacturing and production such as iron ore, coal and grain.
Dry bulk is the largest sector in the shipping industry and is dominated by two vessel types: Capesize and Panamax, the largest and second-largest standard sizes of the dry bulk carriers.
The indices use the Baltic Exchange’s monthly and quarterly forward freight agreements (FFAs) prices. FFAs are cash-settled futures contracts and the main derivative instruments for the physical shipping markets. The indices are the market’s first transparent indices based on FFAs.
The index series includes the:
- S&P GSCI Freight Capesize (Monthly)
- S&P GSCI Freight Capesize (Quarterly)
- S&P GSCI Freight Panamax (Monthly)
- S&P GSCI Freight Panamax (Quarterly)
Fiona Boal, head of commodities and real assets at S&P Dow Jones Indices, said creation of the S&P GSCI Freight Indices aims to fill a market gap in the current state of affairs of the global supply chain industry.
“Disruptions to global supply chains over the last few years have put global freight markets in the spotlight, highlighting their important link in the chain of the world economy and contributions to international trade,” Boal said.
“We are pleased to have collaborated with the Baltic Exchange and TonnEdge to fill a market gap and bring the S&P GSCI Freight Indices to life. As global investors increasingly seek to diversify their investments and look for alternative vehicles to tap into niche market segments, this index series can be a meaningful gauge for the final value of this commodity.”
FFA volumes in the highly liquid dry bulk sector hit 2,524,271 lots in 2021, up 61% on 2020, the Baltic Exchange said. The FFA volumes are based on both Capesize and Panamax vessels, which made up about 90% of the underlying physical dry bulk market flows.
The S&P GSCI Freight Indices, which also draws from TonnEdge’s unique market knowledge in the shipping industry, provide the market efficient tools through which financial market participants can monitor, measure and capture opportunities in this market segment.
Mark Jackson, Baltic Exchange chief executive officer, said: “Reflecting expected changes in supply and demand, Baltic Exchange forward pricing for the dry bulk freight market is an important tool for traders and shipowners looking to manage their exposures to volatile markets.”
Professor Nikos Nomikos of TonnEdge and Bayes Business School in London said, “The market for freight derivatives has grown significantly over the last few years and is now an integral part of the global shipping markets. The…S&P GSCI Freight Indices provide opportunities for connecting the global investment community with the shipping markets.”
S&P Dow Jones Indices is a division of S&P Global, which provides essential intelligence for individuals, companies, and governments to make decisions with confidence.
The Baltic Exchange is the world’s only independent source of maritime market data for trading and settlement of physical and derivative contracts. Full details at www.balticexchange.com.
TonnEdge is a shipping investment technology and analytics company that aims to map standard best practices in financial analytics, risk and investment management to those of the ‘instinct’ driven commercial shipping markets. For more information, visit: www.tonnedge.com.
