The impact of introduction of Forward Freight Agreement on spot market

Purpose of this paper is to investigate the impact of introduction of tanker FFA (forward freight agreements) on spot rates, choosing three routes (TD3, TD5 and TD7). This paper applies the stochastic volatility (SV) models which consider the factors both forward freight agreements and other economic indices. The parameters of SV models are estimated via the software package BUGS (Bayesian inference using Gibbs Sampling). According to analyze the economic insignificant of parameter in the models, and get the conclusion that there is some impact, introduction of tanker forward freight agreements increasing the volatility of spot rates.