(Yicai) Aug. 11 -- The China Securities Regulatory Commission has given the green light for Shanghai Export Container Freight Index futures, it said today, in a move that will help firms hedge against price fluctuation risks.

Shanghai International Energy Exchange, a wholly owned unit of the Shanghai Futures Exchange, announced on July 13 that it was soliciting public opinion on the Shanghai (Export) Containerized Freight Index based on Settled Rates (Europe Service) futures contract and related business rules.

The CSRC said it will urge Shanghai International Energy Exchange to prepare well for the futures’ smooth launch and stable operation.

Shanghai Shipping Exchange compiles and releases the SCFIS (Europe Service) at 3.05 p.m. every Monday. The index represents the change in the settlement freight rate of the Shanghai export container shipping market, reflecting the average level of settlement freight rates in the spot market for Shanghai-Europe routes after container ships depart.

Developing futures based on the price index can help container companies, cargo owners and freight forwarding firms to avoid the risk of price fluctuations and better control logistics costs. If an enterprise wants to use containers to transport goods from Shanghai to Europe, it can first buy futures, and if the freight rate rises, the resulting profit can subsidize the expenditure.

“Global container shipping prices have fluctuated greatly in recent years. Companies in the shipping industry have been looking for tools to manage the risk of freight rate fluctuations. The freight index futures can fill the gap in China’s shipping derivatives market,” said Lin Jie, president of Worldwide Logistics Group, Wenhui Daily reported today.

Editor: Tom Litting