Hedging is not rocket science

A recent 49% rise in freight rates in one month has led to massive interest from ocean carriers, logistic companies and shippers. Allowing customers to agree forward cargo volumes independently of the actual freight rate solves a long lasting problem in the container industry, believes Kai Miller, of ICAP Shipping, who answers some key questions below

How can cargo volumes be separated from the actual freight rate?

This involves using the same procedures as those used in the oil industry. The counterparties focus on slot availability, quality and service levels long time before the actual date of the shipment.