One Thought Of Freight Liner Insurance System
This study proposes a freight variation insurance system through scenario analysis. In the shipping industry, the earnings of freight, which is a major resource of liquid capital, always influence on the shipping management. Shipping companies want the actual freight to be unchangeable in the market. But the freight rate of the shipping liners affected by various factors like quantity of goods transported, always changes in the actual market. The freight variation insurance, in which the insurer undertakes to indemnify or withdraws the difference between the standard freight and the actual freight, will surely cover the risk of steep freight rate variation in the shipping liner market. This insurance system will function as a new method to aid shipping companies. The freight variation insurance system is expected to cover the risk of fluctuating freight rate in the shipping liner market. That is, when the actual freight rate of the current shipping liner market decreases below the standard freight rate fixed in a contract of insurance, the insurer will compensate for freight loss, whereas the insurer will withdraw the difference from the insured (shipping companies) when the actual freight rate of the current shipping liner market increases above the standard freight rate.
Index Terms— Freight Variation Insurance System, Shipping Companies, Shipping Liner Market.