A renminbi forward freight agreement clearing service was launched by Shanghai Clearing House on Tuesday to help companies avoid and manage forward freight risks.

Such agreements are being introduced to adapt to the rapid expansion in cross-border use of the renminbi to give domestic firms a chance to directly participate in the forward freight agreement market.

Given approval by the People's Bank of China on Dec 10, 2012, Shanghai Clearing House started a trial operation of clearing services for over-the-counter renminbi forward freight agreements traded and settled in the Chinese currency.

The renminbi FFA is a forward freight risk management device, with hedging and price discovery functions, and is traded between two counter-parties through brokers registered with the Shanghai Clearing House and is settled in renminbi.

Jeremy Penn, CEO of the Baltic Exchange, the world's only independent source of maritime market information for the trading and settlement of physical and derivative contracts, said: "I have no doubt that this is an important moment in the development of Shanghai as a world-class maritime services center, which is the plan for Shanghai by 2020."