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.