Wed 18 Nov 2009 11:48

Global Risk introduces "optional ports" hedging strategy


Physical hedging strategy is said to offer built-in flexibility with the option to change port.



Denmark-based Global Risk Management has provided an overview of its "optional ports" concept, which according to the company increases the flexibility of fixed price agreements as it offers the possibility to change port even if you have fixed the price of a physical hedge in a specific port.

"Although fixed price agreements (FPAs) with physical delivery may offer the best budget security, they are frequently associated with little or no flexibility," Global Risk Management says.

According to Jan Knudsen, Executive Sales Director at Global Risk Management, fixed price agreements (FPAs) need not be so inflexible. “Physical shipping market operators sometimes overlook the simplest way of combining budget security with operational flexibility.

“For many, choosing optional ports is a vital part of their physical hedging strategy,” says Knudsen. “There are significant strategic advantages to use this option. FPAs with additional flexibility allow operators to take advantage of a change in ports. Better fuel economics such as changing port and canal fees can sometimes make alternative routes more attractive. There is also a risk of product shortage in some parts of the world - an often overlooked aspect of designing a physical hedging strategy. Rescheduling can be accommodated fairly painlessly with optional ports.” added Knudsen.

“The combination of financial knowhow, physical market expertise and being part of a worldwide setup allows Global Risk Management to offer optional ports. Close dialogue with both current and potential clients helps us ensure that the services we provide are in line with the needs of clients. It is also vital that we keep our customers up-to-date on their positions and market information and that their hedging strategies fit their risk profile,” said Knudsen

Risk and flexibility rarely go hand in hand, as risk reduction frequently decreases flexibility (and vice versa). However, with optional ports, an FPA can offer both budget security and the flexibility of changing between ports.

A screenshot taken from Peninsula's homepage on October 4, 2024. Peninsula to receive first of four tankers in Q2 2025  

Methanol-ready vessels form part of bunker supplier's fleet renewal programme.

Stephen Robinson, pictured on his appointment as Head of Bunker Strategy and Procurement at Tankers International. Stephen Robinson heads up bunker desk at Tankers International  

Former Bomin and Cockett MD appointed Head of Bunker Strategy and Procurement.

Chart showing percentage of off-spec and on-spec samples by fuel type, according to VPS. Is your vessel fully protected from the dangers of poor-quality fuel? | Steve Bee, VPS  

Commercial Director highlights issues linked to purchasing fuel and testing quality against old marine fuel standards.

Ships at the Tecon container terminal at the Port of Suape, Brazil. GDE Marine targets Suape LSMGO by year-end  

Expansion plan revealed following '100% incident-free' first month of VLSFO deliveries.

Hercules Tanker Management and Hyundai Mipo Dockyard sign bunker vessel agreement Peninsula CEO seals deal to build LNG bunker vessel  

Agreement signed through shipping company Hercules Tanker Management.

Illustration of Kotug tugboat and the logos of Auramarine and Sanmar Shipyards. Auramarine supply system chosen for landmark methanol-fuelled tugs  

Vessels to enter into service in mid-2025.

A Maersk vessel, pictured from above. Rise in bunker costs hurts Maersk profit  

Shipper blames reroutings via Cape of Good Hope and fuel price increase.

Claus Bulch Klausen, CEO of Dan-Bunkering. Dan-Bunkering posts profit rise in 2023-24  

EBT climbs to $46.8m, whilst revenue dips from previous year's all-time high.

Chart showing percentage of fuel samples by ISO 8217 version, according to VPS. ISO 8217:2024 'a major step forward' | Steve Bee, VPS  

Revision of international marine fuel standard has addressed a number of the requirements associated with newer fuels, says Group Commercial Director.

Carsten Ladekjær, CEO of Glander International Bunkering. EBT down 45.8% for Glander International Bunkering  

CFO lauds 'resilience' as firm highlights decarbonization achievements over past year.


↑  Back to Top


 Related Links