ABSTRACT
Risk management in an industry which is riddled with cyclicalities in its rates and prices and which has made and destroyed millionaires over the years is extremely important. The issue has been discussed in Gray,1, 2 comparing traditional methods of hedging, as he calls the choice of contract during ship operation,3 with the “new” instruments that appeared in the market at the time. The latter were the futures contracts, which were launched by the Baltic Exchange in London and the International Futures Exchange in Bermuda, trading BIFFEX (Baltic International Freight Futures Exchange) and INTEX contracts for the dry bulk and tanker sectors, respectively.
