EU authorised benchmark administrator the Baltic Exchange has partnered with air cargo pricing publisher TAC Index Company of Hong Kong. The Baltic Exchange and TAC will provide new regional general air cargo rate assessments. TAC’s Regional General Air Cargo Indices will be rebranded as the Baltic Air Freight Index (BAF Index) powered by TAC Index and come under the governance of Baltic Exchange Information Services Limited (BEISL). TAC Index will act as the Calculating Agent.

TAC Index provides weekly average assessments for general cargo on 32 major air trade lanes and is based on transaction data submitted by global freight forwarders. Launched in 2016, the TAC Index is widely referenced in the air cargo market and has established itself as a trusted and independent source for market freight rates. 

The Baltic Exchange will initially undertake a rigorous review of the TAC Index’s methodology and processes to establish a governance structure which will ensure the index's compliance with UK’s Financial Conduct Authority’s (FCA) rules for benchmarks. 

The Baltic Exchange already provides benchmark assessments for the maritime markets which are used to settle billions of dollars-worth of derivatives and physical trades every year. Baltic Exchange Information Services is itself authorised by the UK’s FCA as a benchmark administrator under EU Benchmark Regulation. This means that the Baltic Exchange’s main daily maritime indices are regulated by an EU National Competent Authority. 

Baltic Exchange Chief Executive Mark Jackson said:

“Our status as a regulated benchmark administrator opens up all sorts of possibilities for the air freight market. We are confident that the index will provide a completely independent and uncompromised view of the air freight market and the audited Index will become listed by financial clearing houses. This would provide the industry with new ways of managing its freight rate risk and potentially bring in new market participants.” 

TAC Index Managing Director John Peyton Burnett said:

“We are very excited to be partnering with the Baltic Exchange. TAC Index has seen its air freight indices become the primary price benchmarks for carriers, lessors, shippers, forwarders and end-buyers globally. The partnership with the Baltic Exchange will drive further integration of air freight into the global commodity markets and put the indices at the heart of a substantial new global forward freight market.”

The global air freight market is estimated to be worth US$100bn, with 65 million tonnes of general cargo moved by air annually. It is estimated that less than one percent of world trade by tonnage is carried by air, but because of the high value of these goods, they represent about 35 percent of the value of goods shipped globally.

Baltic Exchange member Freight Investor Services (FIS) launched the Air Freight Forward Agreement (AFFA) market in 2019, using TAC as the basis of settlement. FIS worked with TAC to develop a robust methodology for air freight.

"Freight Investor Services has been instrumental in pioneering the development of the airfreight derivatives market from the ground up and the highly volatile market movements of the last few weeks demonstrate the need for better risk management tools,” said Peter Stallion, Airfreight Derivatives Broker at FIS. “Our work with TAC Index has helped to lay solid foundations and this agreement with the Baltic Exchange will help to drive forward liquidity in the airfreight derivatives market."

The Baltic Exchange is the provider of daily assessments for the dry bulk, tanker, gas and container markets. Shipping companies, traders, charterers and shipbrokers use Baltic Exchange to settle Forward Freight Agreements (FFAs) and index-linked trades. The Baltic Dry Index is the Exchange’s best-known index and is a barometer of the cost of moving commodities such as grain, coal and iron ore by sea. The Baltic Exchange is a subsidiary of the Singapore Exchange (SGX).  

ENDS

Issued by Navigate PR on behalf of the Baltic Exchange

For further details please contact:

Bill Lines
T: +44 (0)20 3326 8460
E: blines@navigatepr.com 


About TAC Index

The TAC Indices are the premier providers of accurate, timely, and independent reference price information for Air Cargo around the world. Focused on the major trade lanes and based on actual transaction data, we are a neutral and impartial organization in accordance to antitrust requirements.

TAC specializes in the compilation of industry reference price data for clearly specified products, using rigorous, transparent processes and secure web-based technology. Our objective is to compile and publish reference prices (“Indices”) that are highly representative of physical market transaction prices for selected products. The Indices are based on price data submitted only by forwarding companies active in the relevant product markets. The approach is data driven and based on statistical analysis of pricing data.

The Indices are verifiable processes and provide market participants with confidence in their objectivity and make them suitable for financial instruments. TAC has no financial interest in the prices of the products for which it compiles Indices. All data providers are anonymous and actual transaction data remains completely confidential.

www.tacindex.com

About the Baltic Exchange

The Baltic Exchange is the world's only independent source of maritime market information for the trading and settlement of physical and derivative contracts. Its international community of over 600 members encompasses the majority of world shipping interests and commits to a code of business conduct overseen by the Baltic. 


Baltic Exchange members are responsible for a large proportion of all dry cargo and tanker fixtures as well as the sale and purchase of merchant vessels. In November 2016, the Baltic Exchange was acquired by Singapore Exchange ("SGX"), bringing together complementary strengths of Singapore and London, two of the world's most important maritime centres.  


Baltic Exchange services

• Independent, high quality dry, wet and gas freight market information• Self-regulated chartering, sale and purchase and freight derivatives markets• Central forum for competing freight market interests• Framework ensuring high standards of business practice and co-operation• London-based business facilities for members

www.balticexchange.com