Baltic Exchange Forward Freight Agreements (FFA)

The Baltic Exchange Forward Freight Agreements (FFA) are futures.

But,this is an unregulated market, so they are not really traded, just agreements between parties.

There have been lots of problems as people were not fulfilling their contracts. Why not, you ask?

Well, as far as I know, they aren't required to put up money or collateral. The motto of the Baltic Exchange is "Our word Our Bond".

Now, I am not sure about the futures, but the Baltic Dry Index (an average of actual charter rates) dropped about 90% over the last 5 months. That's right folks, 90 percent! One week you are getting $100,000 per day charter on a ship, and 5 months later you are lucky to get $10,000 per day for the same ship.

Talk about a bubble bursting.

There was a meeting last month, organized by one of the brokers who deals in the FFA's. Everyone was to come together, show their cards, convince the ship owners (or whomever they owed money to) that they were serious players. Ok, maybe they were having a little cash flow problem at the time... but they are serious players in the crazy world of international shipping.

Anyway, the minutes of the meeting have been posted for everyone to see. The press was barred from the meetings, so there's not much other information available.

I thought the minutes were only for members of the Baltic Exchange, but, apparently not.

It's pretty boring, but here it is if you are interested.