Abstract
Since paper freight-hedging tools were introduced to counter volatile tanker freight rates, the hesitant uptake of tanker Forward Freight Agreements (FFAs) has been attributed to traditional risk seeking propensities amongst tanker owners, naturally reluctant to hedge against risk. To test how far the well-documented generic determinants and incentives for corporate hedging could explain this hesitation in the tanker market, the attitudes of tanker owners and charterers towards freight hedging, risk and perceptions of FFAs, were surveyed. Although FFAs were widely viewed as an important development, some respondents were unaware of their function and a majority had not used them. The link between freight hedging activity and participants' risk aversion was not clear-cut, but with market liquidity critical to raising FFA usage improved technical education is essential to widespread acceptance
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