Nodal Exchange, along with FreightWaves, which is an industry leader in offering freight related news, have teamed up with DAT, the biggest freight marketplace in America, to celebrate the successful launch of the world’s first Trucking Freight Futures contracts. It’s a momentous day. In fact, officials say that constructing a Trucking Freight Futures contract marketplace has been a rigorous group effort that’s taken over three years.
But what does this all mean? After all, some of this industry language is confusing and can be hard to understand for an outsider. Let’s try to explain. The U.S. trucking industry is $726 billion industry. That’s no small potatoes. The trucking futures volatility stems from several factors. Included among them are government regulations, trade policies, driver availability, seasonality, consumer spending, and weather events. Now, what this new futures contract achieves is that it offers a way for carriers, shippers, and third-party logistics to calculate their exposure to truckload spot rate volatility – got that?
What Does the Announcement Mean?
Now, with the marketplace established, freight futures contracts are now for the taking on Nodal Exchange. Consequently, these are divided into seven directional lanes between major freight markets. In other words, there are three calculated regional averages and one national average. DATSolutions, which is considered the North American truckload industry’s standard for pricing, has created the daily price assessments utilized for contract settlement across the 7 lanes.
Furthermore, Nodal Exchange has developed a reputable
position in the North American monthly power futures markets with a 35% market
share at the close of Q1 2019. Additionally, Nodal Exchange has increased its
product offering beyond power and gas by incorporating Environment contracts in
November of 2018. And, of course, they diversified further by the launch of
Truck Freight futures today.
Again, this is all a lot of jargon, but what do the fancy
words mean? It means, just like in any marketplace, industry participants can
now hedge their exposure to the price, credit, and liquidity risk in the
This is a step forward and ultimately a good thing for the
trucking industry. It will produce transparency and lock down truck industry
pricing in a way it hasn’t had before.
What do you all think? Is this Trucking Freight Futures
contract worth celebrating?