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Use cases

Core Use Cases in Freight systems

Chartering & Freight Booking

Nominal scenario:

  • Trader books a commodity trade requiring transportation.
  • Chartering desk books a voyage charter, time charter, or CoA.
  • System stores contract terms (rate, laycan, vessel type, cargo size).

Edge cases:

  • Vessel not available → re-negotiation.
  • Laycan missed → penalties or reallocation.
  • Wrong vessel type booked → operational risk.

Voyage Operations

Nominal scenario:

  • Track vessel status, bunkering, port calls, ETA/ETD.

  • Update voyage progress and costs in the system.

  • Edge cases:

  • Weather delays → ETA changes, congestion risk.

  • Vessel breakdown → voyage canceled, new vessel required.
  • Cargo contamination → insurance and claims handling.

Demurrage & Claims

  • Nominal scenario:

  • System calculates laytime allowed vs laytime used.

  • Generate demurrage or despatch invoice.

  • Edge cases:

  • Port congestion → long delays → disputes.

  • Counterparty rejects demurrage calculation → claims process initiated.
  • Missing port logs → incomplete calculation.

Freight Costing & Trade Linkage

  • Nominal scenario:

  • Link freight costs to commodity trades (FOB → CIF).

  • Update delivered cost for PnL and arbitrage evaluation.

  • Edge cases:

  • Incorrect linkage → miscalculated PnL.

  • Commodity trade canceled but freight contract still active → financial loss.
  • Freight cost higher than expected → arbitrage lost.

Freight Derivatives (FFAs)

  • Nominal scenario:

  • Hedge freight exposure with FFAs.

  • System links FFA positions with physical freight exposure.

  • Edge cases:

  • Index mismatch (wrong Baltic route used).

  • Market illiquidity → unable to hedge.
  • Settlement disputes on FFA contract.

Risk Management

  • Nominal scenario:

  • Freight exposure (physical + FFAs) published to risk engine.

  • Daily MTM and VaR calculations include freight.

  • Edge cases:

  • Data delays → exposure not updated in time.

  • Wrong mapping between vessel route and Baltic index.
  • Extreme freight volatility (e.g., 2020-2021 container crisis).

Finance & Settlements

Nominal scenario:

  • Freight invoices generated and matched to charter contracts.

  • Demurrage/claims invoiced and settled.

  • Edge cases:

  • Counterparty disputes → settlement delayed.

  • Wrong FX rate applied → financial misstatement.
  • Duplicate invoices → reconciliation needed.

Integration with External Data

  • Nominal scenario:

  • AIS feed provides vessel positions.

  • Baltic Exchange indices feed freight benchmarks.

  • Edge cases:

  • Missing AIS signal → lost vessel tracking.

  • Index publication delayed → FFA settlement blocked.
  • Data vendor downtime → no updates.