Baltic Exchange

DEFINITION of 'Baltic Exchange'

An exchange that handles the trading and settlement of both physical contracts and derivatives relating to shipping and maritime transportation. The Baltic Exchange provides daily prices for freight, and tracks shipping costs through several indexes. Traders use these indexes to settle forward freight agreements (FFAs), which are freight futures contracts.

BREAKING DOWN 'Baltic Exchange'

The Baltic Exchange was founded in 1744 in London. It publishes the Baltic Dry Index (BDI), which provides pricing information on shipping various cargo types along different routes. The index is used by economists and investors to determine the demand for shipping versus the total shipping capacity.

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RELATED FAQS
  1. What is the difference between Cost and Freight (CFR) and Free on Board (FOB)?

    Learn about some international Incoterms, and find out about the difference between free on board shipping and cost and freight ... Read Answer >>
  2. What kinds of costs are included in Free on Board (FOB) shipping?

    Find out about free on board shipping, the obligations of parties involved and the costs parties must assume in free on board ... Read Answer >>
  3. When do you buy CIF and when do you buy FOB?

    Making the decision to buy CIF or FOB depends on the experience of the buyer in international trade. Each is convenient depending ... Read Answer >>
  4. Do CIF charges affect the customs duties?

    Using CIF when buying goods from abroad does not necessarily help in saving any money. There are other charges to be paid, ... Read Answer >>
  5. What is the difference between CIF and FOB?

    Learn about the differences between FOB and CIF international trade agreements and the advantages and disadvantages for sellers ... Read Answer >>
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    Learn the key elements behind proper accounting, descriptions and procedures when filling out a master bill of lading for ... Read Answer >>
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