Forward Freight Agreement (FFA) is a kind of forward freight agreement between buyers and sellers, which stipulates the specific routes, prices, quantities, etc. , and both parties agree to settle at some point in the future according to the freight difference or rent difference between the spot freight index price (BDI index) of Baltic Shipping Exchange and the contract price.

Unlike the spot market, FFA does not involve the actual transportation of goods. It is a paper freight rate and a financial derivative of freight or rent transactions. Forward freight agreement is a derivative of Baltic Dry Index (BDI), and its business model is to complete transactions off-site and carry out centralized clearing on-site. In many ways, FFA has the basic characteristics of futures trading.

Forward freight agreement is similar to futures contract in essence, with hedging, price discovery and investment functions.