Freight rate volatility is a major challenge for global trade, impacting shippers, carriers and supply chains worldwide. Euronext’s container freight futures provide a transparent, regulated tool to manage this risk, enabling businesses to lock in costs and plan with confidence. This webinar explains how these futures work, who can benefit, and how to get started.
Why hedge freight rates?
Container freight rates can change dramatically in a short time. For example, the cost to ship a forty-foot container from Shanghai rose from $1,500 in early 2020 to over $14,000 by the end of 2021. Such extreme moves disrupt budgets, margins and supply chain planning for shippers, retailers and manufacturers. Unlike other commodities such as oil, where futures markets have long provided risk management tools, many in the container freight sector have only recently gained access to effective hedging solutions.
How do Container Freight Futures work?
Euronext container freight futures are cash-settled contracts based on the Xeneta Shipping Index – Compass (XSI-C). They allow participants to hedge against price changes on major global trade routes. Key features include:
- Four contracts covering the most important trade lanes (Far East to Northern Europe, Far East to US East Coast, Northern Europe to Far East, and Northern Europe to US East Coast)
- Each contract represents five forty-foot equivalent units (FEU), making them accessible for both large and small shippers
- Eighteen consecutive monthly maturities for forward planning
- Trading in US dollars during European business hours, with overlap to Asian and US markets
- Central clearing through Euronext Clearing, ensuring security and transparency
Who should use Freight Futures?
Container freight futures are valuable for a range of market participants:
- Shippers and procurement teams: Lock in future freight costs, protect budgets and reduce exposure to spot rate swings
- Carriers: Secure future revenues by selling forward contracts
- Freight forwarders: Manage risk on behalf of clients and stabilise margins
- Financial institutions and trading houses: Provide liquidity and take positions in the market
Even companies with smaller shipping volumes can benefit by starting with a single contract and scaling up as they become more comfortable with the process.
Getting started: steps to trade
- Internal preparation:
Form a cross-functional team including procurement, treasury and risk management to oversee hedging activities. - Open an account:
Contact a broker or bank with access to Euronext, or reach out to Euronext directly for guidance. - Start small:
Begin by hedging a small percentage of your freight exposure. As you gain experience, you can increase your coverage. - Monitor and adjust:
Use daily statements and market data to track your positions and adapt your strategy as needed.
Trust and transparency
Settlement prices are based on the Xeneta Shipping Index – Compass, a benchmark recognised for its transparency and robust methodology. Contracts are cash-settled, so there is no need for physical delivery. This makes the process straightforward and accessible for finance and procurement teams.
Be prepared, not reactive
Freight volatility is now a structural feature of global trade. Euronext container freight futures offer a practical, secure way to manage this risk, whether you are a shipper, carrier or financial participant. Preparation is key: start discussions internally, connect with brokers or Euronext, and take the first step towards protecting your business from unpredictable freight costs.
For more information or to get started, contact the Euronext commodity team at freight@euronext.com.