The Research On Applications Of Forward Freight Agreements Used In Hedging And Profit Model In Shipping Company

The shipping industry possess risk which is embodied in fluctuation of the freight. From 2003, the sharp fluctuations pose a challenge to the shipping company. So it's necessary to comprehend the tool of the freight risk management. Under such circumstances, this thesis begins to do some research about FFAs.In this paper, there are two research directions. One is the research on the optimal hedging ratio, and another is the research on the profit model based on the FFAs.In part one, we take two busy routes for example to research the optimal hedging ratio. After introduction the Kendall model, the Copula model and the GARCH model, we come to the optimal result by using the minimum variance hedging model.In part two, main purpose is to enrich the shipping company's Profitable approach. After analyzing the Profits mechanism which based on the forward freight agreements, we set up some profit mode which using the relationship of the ship, cargo and FFA.FFA is one of the popular tools of the risk management in market. The research results can offer some decision theory evidences for the shipping companies.