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Ocean Freight Carriers and the Worldscale
The paper market of the ocean freight carrier tanker industry could be more transparent, simple and easy to use in three of four months time. A big-push is on in the freight shipping industry to offer tanker operators and traders a feasible and usable tool for helping them hedge their exposure on the freight carrier markets of the world.

The idea is to begin settling contracts on a dollar-per-metric-tonne basis instead of the present worldscale (WS) flat rate that's used in the tanker market. Presently, so-called deferred contracts are difficult to trade because the worldscale is amended at the start of each new year to take into account the constantly changing price of crude oil, along with other essential variables, like port charges. This means that while an ocean freight carrier in the tanker paper market knows the worldscale flat rate for the present year, they're in the dark and gambling on a floating risk, once the deferred contracts are settled the next year. A deferred contract is one where the flat rate is still not determined, yet.

Why would they want to make the paper tanker market more transparent? To possibly attract outside money into the tanker market by making it easier to understand than the worldscale system?

This idea is already in use on the dry-bulk forward-freight-agreement market that settles on a dollars-per-day basis. A dollars-per-day basis would allow a tanker operator or trader with a time charter to manage the risk involved by trading paper using the same parameters.

This idea seems to make sense as it probably isn't a good idea to be trading a contract when you don't have a firm grasp of the concepts and risks involved. This idea should also make it easier for non-shipping professionals to understand the system in place and possibly get tanker owners to get more involved in the markets. This plans to implement daily trading in a dollars-per-metric-tonne basis on the tanker markets has a tentative startup date of sometime in September, according to freight carrier industry sources.
Posted on 20 Sep 2010 by Momentum
Ocean Freight Carrier Lists on two Exchanges
Ocean bulk freight carriers being listed on two separate exchanges took another step forward last month as John Fredriksen-led Golden Ocean Group finished its dual listing on the Singapore and Oslo exchanges. Golden Ocean Group is the first ocean freight carrier to list itself on these two exchanges at the same time after completing a co-operative deal between the Singapore and Oslo exchanges, last year. There could be other ocean freight carriers looking at Golden Ocean Group's decision and deciding to make a similar move in the future though as the latest reports around the ocean freight carrier industry indicate that floating production, storage and offloading (FPSO) unit player BW Offshore could be thinking about following in the footsteps of Golden Ocean Holdings in the months ahead.

The agreement reached between the Singapore and Oslo exchanges allows Oslo-traded Golden Ocean shares to be tranferred to the Singapore exchange, while the rules and regulations of the Oslo exchange continue to apply.

Why would Golden Ocean Group decide to list on the Singapore exchange at the same time it's listed on the Oslo exchange? Most likely to try to get their hands on some of the money that Asian investors have to spend. Especially the larger institutional investors in Asia that have experience and knowledge of the shipping industry.

John Fredriksen will be a name known to shipping professionals in the United States or a professional who has experience with dual listings. His flagship tanker company Frontline and Golar LNG Energy both trade in Oslo and the United States.

Will we see a flood of dual listings on exchanges around the world if Golden Ocean Group is successful with this dual listing? This is certainly a possibility, but it's probably more likely we'll see other Fredriksen firms begin to follow in the footsteps made by Golden Ocean Holdings, before ocean freight carriers will begin to follow the wave of change Golden Ocean Group has made in the freight shipping industry.
Posted on 17 Sep 2010 by Momentum

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