FFAs, the most common freight derivative, are traded under the terms and conditions of the Forward Freight Agreement Broker Association (FFABA). The main terms of an agreement include the agreed itinerary, the date of the billing, the size of the contract and the rate at which the differences are compensated. As marine markets are more at risk, freight derivatives have become a viable method for shipowners and operators, oil companies, commercial enterprises and grain companies to manage freight interest risk. After a somewhat slow growth in the early 2010s, the global volume of air cargo has increased rapidly in recent years, with cargo volume reaching 61.3 million tonnes in 2019. One of the reasons for the increase in air cargo is the increase in the number of free trade agreements in the world. In 2018, cargo traffic at airports in the Asia-Pacific region accounted for the largest share of freight transport in the world, with approximately 48.5 million tonnes of cargo. APAC was the largest air cargo market in 2019 and the region will offer several growth opportunities for operators in the coming years. Increased demand for cross-border e-commerce will have a significant impact on the growth of the air cargo market in the region. Currently, nearly 68% of market growth comes from APAC. China and Japan are the main air cargo markets in APAC.
Manufacturing in China and Japan increased in 2017 due to increased demand for their exports. This was possible due to the growth in economic activity in Europe and the continued strength of the United States. Market growth in this region is expected to be faster than market growth in other regions. Freight derivatives are financial instruments whose value derives from future freight rates, such as freight and tank car rates. Freight derivatives are often used by end-users (shipowners and grain farmers) and suppliers (integrated oil companies and international trading companies) to reduce risk and guard against price fluctuations in the supply chain. However, as with all derivatives, market speculators – such as hedge funds and retailers – are involved in both the purchase and sale of freight contracts that allow for a new, more liquid market. The London-based Baltic Exchange presents the Daily Baltic Dry Quality Index as a market barometer and leading indicator of the maritime industry. There are investors An overview of the price of transferring important raw materials by sea, but it also helps to lease freight derivatives. The index includes 20 shipping routes, measured on the basis of timing, and covers various major bulk carriers, including Handysize, Supramax, Panamax and Capesize.