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Logistics and supply chains
Freight-rate hedges do not cover the cost of canal draft limits, lock closures or port delays.
- Benchmark
- Panamax freight rate
- Carried by the business
- Cargo per transit at a draft limit
- Settles on
- Panama Canal Authority advisories
Illustrative exampleA charterer moving cargo through Panama
This hypothetical example uses public events and does not describe a client.
1
- 01The business
The charterer hedges the Panamax freight rate, but earns on how much cargo each transit can carry.
- 02What happens
In the 2023 drought, the Panama Canal Authority lowered the permitted draft and cut daily transits.
Ships sailed light or waited, and freight hedges did not pay for the lost cargo.
- 03What the contract names
The contract names the Neopanamax locks, the Authority's draft advisories, a January to May window, and a strike on permitted draft.
- 04How it pays
If the permitted draft sits at or below the strike for ten consecutive days, the contract pays a third of its maximum, rising to the full amount two feet lower.
Share of the maximum it pays
- 33%At the strike
- 67%−1 foot
- 100%−2 feet
Observed dataBenchmark history
These prices provide market context for the worked example.
2
Public benchmark
4.77USD per gallon
+0.38 (+8.6%) over 3 months
U.S. Energy Information Administration, via FRED. Source checked Oct 31, 7:23 PM UTC.
Gulf Coast diesel: 4.39 on Jul 29, 2026, 4.77 on Oct 27, 2026. Low 3.72 on Aug 4, 2026, high 5.21 on Sep 15, 2026. Values in USD per gallon.
Gulf Coast diesel spot prices provide fuel-cost context. They do not measure freight rates or shipping delays.
View source dataIllustrative exampleWhere the hedge stops
This diagram illustrates how a business cost can move away from a benchmark; it does not show observed prices.
3
These curves illustrate a possible pattern and do not represent observed prices.
Illustrative drawing, not market data. Cargo per transit at a draft limit against Panamax freight rate; the shaded gap between them is the spread. A faint band marks the window a contract would cover.
CoverageRisks we can structure
Contracts can address the following risks.
4
- 01Canal draft limits
- 02Closures and rerouting at chokepoints
- 03War-risk premiums
- 04Port congestion and demurrage
- 05Bunker fuel spreads
The processFrom exposure to payment
We start with one business risk and assess whether we can define a contract around it.
5
- 01
Define the exposure
Tell us the event, the place, the period, and what it costs the business.
- 02
Write the terms
Oros names the record, the trigger, the price, the payment, and the limit.
- 03
Find the capital
A counterparty takes the defined risk for a premium, with payment capped in the terms.
- 04
Settle on the record
As calculation agent, Oros applies the terms to the named record and states the result.
Discuss your business risk.
In a thirty-minute call, we can discuss what could change, where and when, and what it would cost your business.