Many companies dealing with Dry Bulk shipping need visibility of the freight market's future. When a buyer and a seller of any given Dry Bulk commodity are agreeing on the terms, they determine who is responsible for the shipping and thus who has the most interest in the freight cost element.

When the seller sells their commodity Free-on-Board (FOB), it means that the other party is responsible for chartering the vessels and arranging the freight. The buyer or receiver will thus be liable for the commodity purchase price, combined with the freight cost and insurance. In this case the seller is typically involved until the commodity is delivered to the vessel at the port of loading, yet they will also be looking at the total Cost, Insurance, and Freight (CIF) cost in case they prefer to start selling either CIF or CFR (Cost and Freight) and thus manage their own freight.

When the seller sells their commodity CFR or CIF, we can assume that they are responsible for arranging for the seaborne freight. The seller will then look at their commodity sale price and freight cost to deliver their goods to market and compare how they are competing with other markets. In this case, the buyer simply has to wait until the commodity is delivered to the designated discharge port. The buyer will also be comparing the freight market and the commodity price to see whether it is favourable for them to consider purchasing FOB. 

Can you simplify the process?

It’s a dynamic space and its very labour-intensive once you assume the responsibility of managing the seaborne freight. In this very fragmented market, there are many asset-light operators and shipbrokers assisting both the exporters and importers (buyers and sellers) of Dry Bulk commodities.

Different commodities are traded differently, yet seaborne freight arrangements have a lot of common themes, which drove us to provide a common problem-solving solution.

Enter Live Matrix, our latest addition to our AXSDry platform. It’s designed to alleviate the headaches of Operators, Charterers, Traders, and Brokers alike, who are involved in managing or purchasing the freight element of commodity shipments and thus require forward visibility of freight rates. 

What can you do with Live Matrix?

There are many reasons shipping professionals need forward freight rate visibility. Shipping services are always contracted for the future, the price contracted today will always be different from the market price available on the day it is loaded.

One would then best compare contract rates with expected market conditions and look at chartered tonnage exposure vs. expected freight market conditions. This way, you can decide whether to lock in the freight rates now or wait, as well as whether to hedge your freight exposure.

You can also determine the best commodity origination location by comparing commodity purchase price plus freight cost.

Live Matrix helps you build your own route models to make sure you have the relevant and specific information pertaining to their own business even for non-standard Dry Bulk routes. You will thus be able to predict what your freight cost and exposure is in the future to support buying/selling and shipping of commodities. 

How does it work?

Live Matrix takes The Baltic Exchange standard Time Charter indices as a reference to your custom-modelled route. It then accounts for FFA prices from liquid markets, before comparing that route's last closed spot price with the last FFA price to create a spot spread.

The difference is then applied to the forward curves for all periods on your route. Live Matrix will calculate forward curves for one, two, and three months ahead, as well as one, two, and three quarters ahead.

It also follows live FFAs and bunker prices throughout the day and updates the values for all your routes and maturities instantly. You will thus be able to observe the freight price variances for the select periods changing based on today’s FFA and Bunker trading.

By generating and automatically updating hundreds and hundreds of individual calculations in a single screen, Live Matrix provides you with an unprecedented streamlining of benchmarking for the Dry Bulk market. 

You can find further details about our Live Matrix module below: