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It gives the contract owner the right to buy and sell the price of freight for future dates. FFAs are built on an index composed of a shipping route for tanker or a basket of routes for dry bulk, contracts are traded ‘over the counter’ on a principal-to-principal basis and can be cleared through a clearing house.
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The TSR is about 3,900 kilometres (2,100 nmi) long and offers significant distance savings between Europe and Asia. It is the shortest of the Arctic shipping routes. In contrast to the Northern Sea Route and the Northwest Passage, which are both coastal routes, the TSR is a mid-ocean route and passes close to the North Pole. [4]