FreightWaves, Nodal and DAT launched futures to let shippers lock in truck-route prices

WIRED reported in March 2019 on the first US trucking freight futures marketplace, launched that Friday by analytics firm FreightWaves, Virginia-based Nodal Exchange and DAT, which runs the country's largest load board. It offers contracts up to 16 months ahead on a handful of routes: Seattle to Los Angeles, Los Angeles to Dallas, and the triangle of Chicago, Atlanta and Philadelphia.

The hedge works like this. A shipper expecting to move 50 truckloads from Atlanta to Chicago in April 2020 asks Nodal for a price, say $1.40 a mile, calculated from DAT's data, and pays a fee split between Nodal, DAT and FreightWaves. When the time comes, if costs have risen 30 cents, the shipper still pays its carrier $1.70 but is paid back the difference through the futures; if costs fall, it pays the difference. FreightWaves CEO Craig Fuller says it is a financial instrument, not a truck showing up at your dock.

The context is a conservative industry where most contracts are closer to handshake deals than binding agreements and either side can renegotiate if prices move. DAT's load board began in the 1970s as index cards on a bulletin board at an Oregon truck stop, and smartphones and electronic logging devices now generate far more data. It is also open to speculators, WIRED noted.

Shippers and carriers face price swings from driver shortages, port strikes and weather, and handshake contracts offer little protection.

DAT's load-board data gives an independent rate series that the contract can settle against.

Cash settlement means nobody needs to commit a physical truck, so the hedge works for shippers and carriers alike.

Digitized freight data from phones and logging devices made lane prices measurable enough to trade.

When physical contracts are unreliable, a cash-settled index contract can do the hedging, if someone supplies a trusted price series.

WIRED reported only the launch, with contracts on a few routes up to 16 months out; it gave no trading volumes or later results.