It took only hours after contracts were launched late last month on the New York Mercantile Exchange (Nymex) for the first liquefied natural gas (LNG) freight futures trades to be executed, a sign of the demand for more risk management in the gas export market.

Two London-based companies said they executed their first trades of the new contracts on Dec. 23 after they were launched by CME Group to cover three shipping routes.

Shipping services firm Clarksons said it helped complete the first trades between leading global commodity traders Trafigura Group Pte. Ltd. and Vitol. The trades covered 1Q2020 spreads between Australia’s Gladstone LNG facility and Tokyo, as well as the Sabine Pass export terminal on the Gulf Coast and the UK. A contract covering Sabine Pass to Tokyo is also now listed on Nymex.

Shipbroker Affinity LLP also said it facilitated the first trades of the futures involving an affiliate of France’s Total SA, a major global LNG portfolio player, and Trafigura. Affinity said the trades for clearing were submitted using CME’s ClearPort system.

The contracts allow traders to hedge LNG freight costs, or the rates charged to carry the super-chilled fuel by ship. A spike in global supply from countries that include Australia, Russia and the United States, combined with revised rules for marine sector emissions and an ongoing trade war between the United States and China, have sowed uncertainty for the global shipping business.

While more tonnage, or available cargo-carrying capacity, is available in the LNG space amid the glut, demand has been robust and is expected to remain strong. The traditional point-to-point model that has served the LNG trade for decades under long-term contracts has evolved as a more diverse set of suppliers has entered the market and driven more spot cargos, creating a tighter shipping market and additional volatility.

“We have seen an increase in demand from market participants wishing to manage freight exposure within LNG,” said Clarksons’ Christian Greenop, a freight derivatives broker.

For example, some LNG ships traded in the single-voyage market early last year at a low of $10,000/day and broke the $170,000/day mark by October, Greenop said. “So, a risk management tool is particularly useful given this level of volatility.”

Traders that include Trafigura, which charter ships to move LNG, have reported sharp spikes in delivered volumes in recent years. Global seaborne trade last year was 356 million metric tons (47 Bcf/d), of which 30% was traded in the spot market. The seaborne trade is set to grow by 11% in 2020, according to Clarksons.

CME launched the LNG freight futures contracts as it works to bring more price transparency to the global market. The freight offering came after the exchange operator rolled out a U.S. LNG export futures contract last October. While that has been slow to take off, it was another effort to enhance short-term price discovery and risk management for the nascent Gulf Coast market.

Shipping costs factor heavily into the overall price for LNG depending on the destination. NGI’s LNG Insight recently began publishing daily freight costs along a variety of trade routes, as well as spot vessel rates, or the costs to charter a ship.