SHANGHAI Shipping Freight Exchange Co plans to launch a new shipping rate derivative based on coastal coal freight rate as part of efforts to provide more shipping related financial derivatives to help the city meet its goal to be global shipping hub.

Trading of the contracts based on the China Coastal Bulk (Coal) Freight Index will officially start next Wednesday and this will help shipping companies and cargo owners to avoid fluctuating freight rates through forward freight agreement.

The dry bulk freight index will be based on nine routes from northern ports in the country to destinations ports including Shanghai and Ningbo. The index will use the rates applicable on September 1.

The freight exchange requires 20 percent of margin for each trader, and the index will be updated daily.

Although Shanghai has seen a strong growth in its throughput of dry bulk cargo and became the world's top container port in 2010, it is still lacking in many shipping-related financial products and services.

Shipping financing and other maritime services are also key in enhancing the industry as a whole and will help the city sail toward its goal of a global shipping hub by 2020.

Earlier this year, the exchange launched derivatives based on container freight, the first in the domestic market. The container freight index is based on rates of shipping routes to the United States and North America.