EU authorized benchmark manager the Baltic Exchange has actually partnered with air freight rates author TAC Index Company ofHong Kong The Baltic Exchange and also TAC will certainly give brand-new local basic air freight price analyses. TAC’s Regional General Air Cargo Indices will certainly be rebranded as the Baltic Air Freight Index (BAF Index) powered by TAC Index and also come under the administration of Baltic Exchange Information Services Limited (BEISL). TAC Index will certainly function as the Calculating Agent.
TAC Index supplies once a week ordinary analyses for basic freight on 32 significant air profession lanes and also is based upon purchase information sent by international products forwarders. Launched in 2016, the TAC Index is commonly referenced airborne freight market and also has actually developed itself as a relied on and also independent resource for market products prices.
The Baltic Exchange will originally take on an extensive evaluation of the TAC Index’s method and also procedures to develop an administration framework which will certainly make sure the index’s conformity with UK’s Financial Conduct Authority’s (FCA) guidelines for standards.
Image Credits: Baltic Exchange
The Baltic Exchange currently supplies benchmark analyses for the maritime markets which are utilized to resolve billions of dollars-worth of by-products and also physical professions yearly. Baltic Exchange Information Services is itself authorized by the UK’s FCA as a benchmark manager under EUBenchmark Regulation This indicates that the Baltic Exchange’s primary day-to-day maritime indices are managed by an EU National Competent Authority.
Baltic Exchange Chief Executive Mark Jackson stated:
“Our status as a regulated benchmark administrator opens up all sorts of possibilities for the air freight market. We are confident that the index will provide a completely independent and uncompromised view of the air freight market and the audited Index will become listed by financial clearing houses. This would provide the industry with new ways of managing its freight rate risk and potentially bring in new market participants.”
TAC Index Managing Director John Peyton Burnett stated:
“We are very excited to be partnering with the Baltic Exchange. TAC Index has seen its air freight indices become the primary price benchmarks for carriers, lessors, shippers, forwarders and end-buyers globally. The partnership with the Baltic Exchange will drive further integration of air freight into the global commodity markets and put the indices at the heart of a substantial new global forward freight market.”
The international air cargo market is approximated to be worth US$ 100bn, with 65 million tonnes of basic freight relocated by air yearly. It is approximated that much less than one percent of globe profession by tonnage is brought by air, however as a result of the high worth of these products, they stand for regarding 35 percent of the worth of products delivered around the world.
Baltic Exchange participant Freight Investor Services (FIS) introduced the Air Freight Forward Agreement (AFFA) market in 2019, utilizing TAC as the basis of negotiation. FIS collaborated with TAC to establish a durable method for air cargo.
“Freight Investor Services has been instrumental in pioneering the development of the airfreight derivatives market from the ground up and the highly volatile market movements of the last few weeks demonstrate the need for better risk management tools,” stated Peter Stallion, Airfreight Derivatives Broker at FIS. “Our work with TAC Index has helped to lay solid foundations and this agreement with the Baltic Exchange will help to drive forward liquidity in the airfreight derivatives market.”
The Baltic Exchange is the carrier of day-to-day analyses for the completely dry mass, vessel, gas and also container markets. Shipping business, investors, charterers and also shipbrokers utilize Baltic Exchange to resolve Forward Freight Agreements (FFAs) and also index-linked professions. The Baltic Dry Index is the Exchange’s best-known index and also is a measure of the price of relocating assets such as grain, coal and also iron ore by sea. The Baltic Exchange is a subsidiary of the Singapore Exchange (SGX).
