Sample Essay

A study conducted in 2004 explored the impact of the FFA or the Forward Freight Agreement. The results of the study indicated that “the onset of FFA trading: (a) decreased spot price volatility in all investigated routes, (b) has had an impact on the asymmetry of volatility in Pacific routes, and (c) substantially improved the quality and speed of information flow in three out of the four investigated routes. After introducing control variables, that may affect price volatility, the results indicate that only in voyage routes may the reduction in volatility be a direct consequence of FFA trading.”

(Kavussanos, Visvikis & Batchelor, 2004) In 2004, the economist predicted that the Forward Freight Agreement would be changing the structure and the future for the dry bulk market. As predicted this has been the case, and the change has been for the positive as a result of the development taking place in the Asian and East Asian countries which are greatly increasing the economic activity in the dry bulk market by trading through the means of large ship vessels for importing raw material like coal.

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