Three organizations have joined forces to launch the industry's first Trucking Freight Futures exchange, set to open March 29.
Derivatives exchange and clearinghouse Nodal Exchange is partnering with logistics data and analytics provider FreightWaves and price reporting agency DAT to create the futures market for trucking, which will allow buyers and sellers to trade financial contracts for freight pricing, helping them hedge their exposure to spot rate volatility, the firms said.
The project is three years in the making, and follows a recent series of presentations in seven major markets designed to inform potential participants about the need for a trucking freight futures market and how it will work.
Initial contracts will be based on seven lanes between major freight markets, three regional baskets of lanes and a national average truckload spot rate, according to the companies.
"Freight and transportation costs are the most substantial risk to the earnings of an estimated 40 percent of S&P 500 companies," said Craig Fuller, founder and CEO of FreightWaves, who has spearheaded the effort to launch the freight futures market. "Labor shortages, regulatory and trade environments, and the trucking industry's 'OPEC' moment in December 2017 with the electronic logging device (ELD) mandate, has created the right inflection point for Trucking Freight Futures to come to market."
Trucking Freight Futures will be financially settled contracts listed on Nodal Exchange, a designated contract market regulated by the U.S. Commodity Futures Trading Commission (CFTC), the organizations said. The contracts will clear through Nodal Clear, the clearinghouse for Nodal Exchange and central counterparty for Nodal Exchange transactions.