As with all derivatives, market speculators, like hedge funds and individual traders, participate in both the buying and selling of these contracts providing for a new, more liquid, marketplace.
Freight derivatives now include exchange-traded futures (ETFs), swaps futures and the older "Forward Freight Agreements", which were sold over-the-counter. Freight derivatives are most often used to hedge risks against large swings in price, a model popularized in the agriculture and commodities industries.
Freight derivatives are a relatively new product in the global marketplace, but the advent of clearing services has brought increased safety, and with it liquidity, into the business.
Investment dictionary. Academic. 2012.