The Company uses interest rate swaps to manage its exposure to interest rate risk on its debt. Generally, the Company enters into interest rate swaps with the objective of effectively converting debt from a floating-rate to a fixed-rate obligation. As of December 31, 2023, the Company’s outstanding interest rate swaps were designated as hedging instruments and qualified as cash flow hedges.

For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on the derivative instrument is reported as a component of Other comprehensive (loss)/income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings and is presented in the same line item in the Consolidated Statements of Operations as the earnings effect of the hedged item.

The Company uses forward freight agreements (“FFAs”), bunker swaps and EU Emission Allowance (“EUA”) futures to manage its exposure to changes in charter hire rates, market bunker prices and market EUA prices, respectively. Generally, the Company enters into FFAs with the objective of effectively fixing charter hire rates for future charter transactions, bunker swaps with the objective of effectively fixing forecasted bunker transactions and EUA futures with the objective of fixing forecasted EUA obligations under the EU Emissions Trading System. The Company utilizes these derivative instruments to economically hedge these risks and does not designate them as hedging instruments.

For derivative instruments that are not designated as hedging instruments, changes in the fair value of the instruments and the gain or loss ultimately realized upon settlement of the derivative are reported in Realized and unrealized (gain)/loss on derivative instruments, net in the Consolidated Statements of Operations.

As of December 31, 2023, the Company has International Swaps and Derivatives Association agreements with five financial institutions which contain netting provisions. In addition to a master agreement with the Company supported by a primary parent guarantee on either side, the Company also has associated credit support agreements in place with the one counterparty which, among other things, provide the circumstances under which either party is required to post eligible collateral when the market value of transactions covered by these agreements exceeds specified thresholds. The Company does not expect non-performance by any of these counterparties.

In June 2023, the Company modified its then outstanding interest rate swap agreements to replace the underlying benchmark interest rate from LIBOR to SOFR with all other material terms remaining unchanged. As discussed in Note 2. Significant Accounting Policies, the Company utilized certain expedients under ASU 2020-04 to account for these modifications as continuations of existing agreements which had no impact on our consolidated financial statements.

As of December 31, 2023, the Company had the following outstanding interest rate swaps that were designated and qualified as cash flow hedges.


	Fair Value of Derivative Assets/(Liabilities)
	Balance Sheet Location	December 31, 2023		December 31, 2022
Derivatives designated as hedging instruments
Interest rate contracts – interest rate swaps
	Fair value of derivative assets – current	$	6,824	$	8,479
	Fair value of derivative assets – noncurrent	3,136		8,184
		$	9,960	$	16,663


	Fair value of derivative liabilities – noncurrent	$	(1,505)	$	—
		$	(1,505)	$	—

The effect of these instruments on the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021 is as follows:


	Gain/(Loss) Recognized in Other Comprehensive (Loss)/Income for the Year Ended							Gain/(Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings for the Year Ended
Derivatives in Cash Flow Hedging Relationships	December 31, 2023		December 31, 2022		December 31, 2021		Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Income into Earnings	December 31, 2023		December 31, 2022		December 31, 2021
Interest rate contracts
Interest rate swaps	$	1,523	$	16,609	$	2,106	Interest expense	$	9,621	$	1,947	$	(913)

Further information on the effect of these instruments on the Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021 is as follows:


	Year Ended
	December 31, 2023		December 31, 2022		December 31, 2021
Accumulated other comprehensive income/(loss), beginning balance	$	16,549	$	1,886	$	(1,132)
Gain recognized in other comprehensive (loss)/income	1,523		16,609		2,106
(Gain)/loss reclassified from other comprehensive (loss)/income into earnings	(9,621)		(1,947)		913
Accumulated other comprehensive income, ending balance	$	8,451	$	16,549	$	1,886

Of the amount recorded in Accumulated other comprehensive income as of December 31, 2023, $7.0 million is expected to be reclassified into earnings within the next twelve months.

As of December 31, 2023, $2.1 million, $0.1 million and less than $0.1 million of collateral was pledged related to outstanding FFAs, bunker swaps and EUA futures, respectively. See Note 2. Significant Accounting Policies for a discussion of the Company’s policy on collateral on derivatives.

As of December 31, 2023, the Company had outstanding bunker swap agreements to purchase 1,270 metric tons of low sulphur fuel oil for prices ranging between $527 and $532 per metric ton that will expire during the first quarter of 2024.

As of December 31, 2023, the Company had outstanding EUA futures to purchase 3,000 allowances for $80 thousand per thousand allowances that will settle in December 2024.


FFA Period	Average FFA Contract Price(1)		Number of Days Hedged
Quarter ending March 31, 2024 – Buy Positions	$	—	—
Quarter ending March 31, 2024 – Sell Positions	$	13,479	540


	Fair Value of Derivative Assets/(Liabilities)
	Balance Sheet Location	December 31, 2023		December 31, 2022
Derivatives not designated as hedging instruments
Commodity contracts – FFAs




	Fair value of derivative liabilities – current	$	(464)	$	(70)



Commodity contracts – Bunker swaps




	Fair value of derivative liabilities – current	$	(14)	$	(93)



Commodity contracts – EUA futures




	Fair value of derivative liabilities – current	$	(1)	$	—

The effect of these instruments on the Consolidated Statements of Operations, which is presented in Realized and unrealized (gain)/loss on derivative instruments, net for the years ended December 31, 2023, 2022 and 2021 is as follows:


	(Gain)/Loss Recognized in Earnings for the Year Ended
Derivatives not designated as hedging instruments	December 31, 2023		December 31, 2022		December 31, 2021
Commodity contracts
FFAs – realized (gain)/loss	$	(1,880)	$	(11,433)	$	41,139
Bunker swaps – realized gain	(568)		(4,358)		(2,963)

	(2,448)		(15,791)		38,176
FFAs – unrealized loss	574		1,464		59
Bunker swaps – unrealized (gain)/loss	(79)		468		9
EU Allowance futures – unrealized loss	1		—		—
	496		1,932		68
Realized and unrealized (gain)/loss on derivative instruments, net	$	(1,952)	$	(13,859)	$	38,244