I recently caught up with Anders Valentin Vogt and Mads Frank Markussen, two young Danes who look so similar they could be brothers. By some strange coincidence, they share the same birthday, although Anders is a year older than Frank.
Anders and Frank work within the Copenhagen Merchants Group – CM Group, a second-generation family-owned company involved in commodity brokerage and trading, shipping, logistics, terminals, production, and market intelligence. Anders heads the newly established entity CM Navigator, and Frank works as a freight trader in Navi Merchants.
Anders has been with the group for over eight years, working initially in the Agri and Biomass (wood pellets) markets. His roots in agriculture run far back, having grown up on a farm.
Frank was a freight trader for ten years, most notably in Denmark with DS NORDEN but also with Louis Dreyfus in Switzerland, where, incidentally, he read the Sugar Trading Manual (now, unfortunately, out of print).
CM Navigator is a subscription platform with S&D analysis, trade flows, physical prices (nominal and actual bids & offers), and dry bulk freight rates. Its freight calculator runs 360,000 freight rates, updated daily (approximately 30.000 voyages 12 months forward). Navi Merchants is a shipowner and charterer that trades freight, taking market positions, mostly on European trades and primarily in European short sea routes.
I began the interview by asking the duo if the two entities were legally separate and what the relationships and synergies between the two were.
“They are separate entities,” Anders explained, “But owned by the family company. There are 78 companies in the group, some wholly owned, others co-owned with, for example, Bunge, Viterra or USTC group. There are a lot of synergies between the different entities.”
I asked him how he generated 360,000 freight rates. It seemed an incredible number.
“We have a team of programmers, economists and mathematicians who produce them via our proprietary models,” he told me. “We realized that advantages in computing technology meant that what had previously been done by hand could now be done faster by computers.”
“We looked at all the theoretical ways you can calculate a freight rate on every commodity from coaster to capesize,” he continued. “We built a model incorporating them all. Then we used our contacts to validate the inputs for, for example, marine insurance, speed versus fuel consumption, and our grain knowledge to build a database of grain tradeflows. We add live data that we buy externally – and update every two hours – for, for example, carbon or fuel prices.
“As we are physically present in freight and grain, we can feed the machine with what is happening in the spot markets, which means we are as close to reality as possible.”
I asked him if a client could charter a ship or trade an FFA (Forward Freight Agreement) on the platform.
“Currently, you cannot trade anything on CM Navigator,” he replied. “However, if you want to charter a vessel, we can put you in contact with the right person within the group.”
As well as freight, CM Navigator tracks trade flows on ten cereals – wheat, corn, barley, durum, wheat, triticale, oats, rye, rapeseed, and peas – and is currently adding soybeans and soy meal. I asked Anders if the platform tracked every vessel by commodity.
“We distinguish between tradeflows and vessel lineups,” he answered. “We aggregate import/export volumes by country. On the lineups, we’re strongest in the Baltic Sea on wheat and barley.”
“Do you do containers or only bulk?” I asked.
“Only dry bulk. It is our specialization and our expertise. Container freight rates are challenging as the top nine carriers control 83 per cent of capacity. In dry bulk, the largest three companies don’t even control ten per cent of the ships.”
So far, I have been talking mainly with Anders, but I also had some general freight questions for Frank.
“For our non-specialist readers,” I asked him, “Could you explain how the FFA market works – and can you charter a vessel on a basis against an FFA?”
“The FFA markets work the same way as other derivative markets – FFAs are swaps cleared via exchanges with brokers acting as go-betweens. Freight sellers like ourselves can lay off their flat price risk via FFAs; in that sense, it is similar to basis trading in many other markets. The main difference between FFAs and wheat futures is that the MATIF or CBOT settles through physical delivery, while FFAs are financially settled based on an index of global routes.
“It makes FFAs more volatile than other futures because you cannot take delivery of ships against an FFA, forcing physical and derivatives to converge. If I am not mistaken, the FFA market is one of the world’s most volatile derivatives in percentage swings.”
“Are hedge funds active in the FFA market?” I asked.
“Yes, very much. I would love for you to interview some hedge funds that have entered FFA markets in recent years,” Frank replied. “My gut feeling is they put too much money into a relatively illiquid market. The ensuing volatility means shipowners and freight traders must constantly revise their bids and offers as customers buy an all-inclusive price, not a premium to a financial product. It is, of course, an opportunity for the smart traders!”
“Can you charter a vessel on a basis against an FFA?” I asked.
“Yes,” he replied. “You can charter a ship on index-linked pricing, the same index that FFAs settle on. It is a popular way for traders who want to add physical presence without incurring huge flat price risks. It has other risks, though. There is no free lunch.”
“How far out can you charter a vessel on a voyage basis?”
“The best thing about global dry bulk freight markets,” he answered, “Is that as long as all laws are adhered to, there are no rules. You can contract whatever you want.”
“One model we operate here in Navi Merchants is for dry bulk freight customers looking to hedge their forward freight exposure. They need the flexibility not offered by traditional voyage contracts, so they can get a financial stake as a silent partner in a one-year time charter where Navi Merchants commercially manages the ship, and we split the profits/loss.”
Do traders usually charter vessels on a Time Charter or Voyage basis?
“Large traders focus on time charter as they need flexibility. Smaller traders usually do voyage charters because they do not have the skill set to run a fleet and because it reduces their risk, as voyage freight is an all-inclusive price.”
How big an issue is counterparty and default risk – and how do you manage it?
“It is an integral part of any trading company, commodities or shipping. Effective management involves rigorous risk assessment. Staying informed about market conditions is vital, and diversifying customer portfolios helps spread risk. Strong contractual safeguards are essential, while continuous monitoring of counterparties is crucial.“
“Do you use AI in your programming, and how do you see it changing your freight world? I asked.
“I will leave the freight trading part to Frank, Anders replied. “But in a CM Navigator context, we rely on old-fashioned fundamental analysis. We see the potential for AI to increase the accuracy of lineups and S&D forecasts using satellite imagery.
“However, AI could significantly impact market dynamics regarding the speed with which the markets react to disruptive events and capture opportunities. It may give the bigger trade houses an advantage or introduce new players into the industry, shaking things up a little, as in other industries.”
“I am part of a network in the Danish Technical University,” Frank told me, “where we try to combine business knowledge with students and academics, funded primarily by Maersk Foundation”.
“Ships operate under the constraints of physics,” he continued, “making them suitable for modelling and optimization. Whether it’s engine performance, hull design, or port logistics, AI-driven solutions are on the horizon.
“Some shipowners are exploring AI-driven trading models, and companies like Cargill use systematic trading models to generate trade recommendations. While these models exist, their effectiveness can vary widely. However, AI’s current limitations in price prediction shouldn’t overshadow the fact that humans also have limitations. While top traders excel, not everyone in the shipping industry consistently makes profits. The future likely involves a combination of human expertise and AI.”
“What does the future look like for the freight trading sector?” I asked.
“I think the next step is consolidation – amongst shipowners, freight traders and data providers,” Frank replied. “We are already seeing consolidation among major players in the freight trading sector, driven by the desire to achieve economies of scale, improve operational efficiency, and enhance their ability to weather market volatility. You need serious IT, data subscriptions and human resources to compete with the best.”
I couldn’t interview two Millennium-generation Danes without asking them about diversity and sustainability.
“Diversity is on our agenda,” Anders told me. “Diversity of ethnicity and nationality comes naturally in a global industry. However, when it comes to gender, it is not so easy, especially within these traditionally male-dominated industries like tech, commodity trading, and shipping. For example, last time we advertised for a software developer, 1 of 20 were female. In CM Navigator, we are a team of five nationalities based in three offices with around 40 per cent women.”
“Sustainability is essential,” he continued. “Customers must have it, and they ask for it to be free. We calculate carbon costs and emissions on the freight along with every freight rate. We aim to combine our data into a full carbon data solution.”
Do Danes have shipping in their blood,” I asked. “Are you modern Vikings?
“There’s certainly a unique connection between Denmark and the shipping industry, Frank replied. “What struck me in Switzerland was that very few locals seemed interested in pursuing careers in shipping or commodities. In Denmark, it’s a different story altogether. Shipping, especially through companies like Maersk, is a matter of national pride.”
“You could say maritime traditions run deep in our veins,” he added. “My family has ties to the industry – my parents were part of the Maersk family when they met.”
“You mention Switzerland,” I retorted, “But a Swiss company, MSC, is currently the world’s largest shipping company, just ahead of Maersk.”
“That’s true,” he replied. “But MSC has a Danish CEO!”
“Last question,” I said. “Tell me one thing about you that isn’t on your LinkedIn profiles.”
“I did amateur car racing when I was younger,” Anders confided. “I have a racing simulator at home. My girlfriend hates it, but she can also see that I don’t watch football games or anything, so that’s my thing. And then she gets some quiet time when I sit there because I’ll focus on that for a couple of hours, and then she has everything to herself.”
“And you?” I asked Frank.
“I love Lego,” he replied. “And somehow, my son also loves Legos. It probably helps I give him Lego sets for every occasion. We do a lot of Lego together. My daughter has also taken to Legos but prefers to use them as dolls and likes changing their hair and clothes.”
“Lego is a Danish company with a Danish CEO,” I replied. “Thank you, both, for your time and input.”
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