Shipping’s next generation of risk management tools could allow owners and charterers to hedge directly against specific events rather than relying solely on traditional freight derivatives, according to Mark Jackson, chief executive of the Baltic Exchange. Speaking ahead of the Splash Singapore conference, Jackson outlined how outcome markets could emerge alongside established instruments like FFAs and options as the industry seeks protection from increasingly varied sources of volatility.
The Emergence of Outcome Markets
Jackson told Splash247 that traditional risk management tools will play a critical role, but new approaches are on the horizon.
“Traditional instruments like FFAs and options will become more important than ever, but we may also see the emergence of new tools such as outcome markets where one can hedge against a fundamental event or factor directly.”
Such markets could also produce valuable data for commercial decision-making, according to Jackson, helping owners and charterers assess changing risks more accurately. The need for better risk tools is becoming more pressing as freight markets are buffeted by fleet movements, geopolitical shocks, weather disruptions, and rapidly shifting trade patterns.
Current Market Volatility and the Baltic Dry Index
Jackson expects volatility to be central to the dry bulk discussion at Splash Singapore, despite a strong start to the year. Spot rates have traded near multiyear highs, supported by robust capesize demand and freight sentiment that has proved more resilient than expected amid difficult macroeconomic and geopolitical conditions.
The Baltic Dry Index (BDI) has reflected that strength, reaching levels not seen since mid-2022. The index marked its 40th anniversary in October last year. Nevertheless, Jackson cautioned against assuming the market’s recent momentum will continue uninterrupted.
“Volatility will continue to have an impact on the dry bulk freight market and on tonne-mile demand,” he said. “In times of uncertainty, transparent and independent market benchmarks become even more important.”
Splash Singapore: A Forum for Forward-Thinking
Splash Singapore, taking place in September at the Fairmont Hotel in Singapore, will bring together industry leaders to debate the future of dry bulk and wider shipping. Jackson will join the dry bulk markets panel and views the conference as an opportunity to connect different strands of the industry and test ideas against real-world experience.
“I am certain that this year’s event will bring together a rich tapestry of industry experts from across the dry bulk and wider shipping community, enabling us all to connect and exchange ideas in a forward-thinking manner,” he said.
Technology will be another major theme throughout the day. Jackson emphasised the growing importance of trusted data and independent benchmarks as companies navigate both commercial and regulatory decisions.
Implications for Freight Professionals
For freight forwarders, logistics managers, and ocean carriers, the rise of outcome markets could provide more precise hedging tools, allowing protection against specific disruptions such as port closures, canal blockages, or sudden fuel price spikes. The Baltic Exchange’s support for transparent benchmarks reinforces the need for reliable indices in contract pricing and risk management. Operators should monitor developments in outcome markets and consider how these instruments might complement existing FFA strategies in an increasingly volatile environment.
| Risk Factor | Traditional Hedging | Possible Outcome Market Application |
|---|---|---|
| Weather disruption | FFA based on route rates | Hedge against specific weather event (e.g., typhoon) |
| Geopolitical shock | Option on index | Hedge against war risk premium on a lane |
| Fleet congestion | Time charter equivalent | Hedge against port congestion delay costs |
Watch List
- September 2026 Splash Singapore conference: Further insights on outcome markets and dry bulk volatility.
- Baltic Dry Index trajectory: Whether current multiyear highs hold or recede.
- Industry adoption of new derivatives: Any announcements from exchanges or brokers on outcome market products.
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