Money is not cheap, and good credit is hard to get. How can shipping companies and others avoid situations where hedging of the fuel becomes a nightmare of deposits and cash out - in case of market drops?
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There are actually hedging strategies which allow Fuel Risk Managers and CFO’s to have a good night’s sleep, according to Leon Pedersen, Sales Manager at Global Risk Management’s Copenhagen Branch.
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Protection against rising prices – benefitting from falling prices
Leon continues: “With the current difficult market conditions under which many shipping companies operate at the moment – protection against rising fuel expenses makes perfect sense. Global Risk Management specialises in customised hedging solutions and has various tools for this purpose”.
E.g. if a shipping company wishes to protect itself against rising bunker prices and has the need of getting physical supply of bunkers at the same time, one strategy could be the Maximum Price Agreement (MPA). This strategy works like an insurance against price increases. As the name implies, we agree on a maximum price which is the highest price you have to pay for the fuel. Once you have paid the insurance premium, no further deposit/collateral will apply for this agreement. If the spot price at the time of bunkering is below the agreed maximum price, you will be invoiced the spot price. If the spot price is above the maximum price, you will be invoiced the maximum price. Very simple.
Have a good night’s sleep without worrying about bunker price and liquidity risk.
Read more about our hedging strategies at
http://www.global-riskmanagement.com/Hedging_tools.aspx
Questions to the above?
Contact Leon Samsø Pedersen: lsp@global-riskmanagement.com / telephone no.: +45 8838 0030
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