Indiana Companies Uncertain About Trucking Futures Exchange

Posted: Updated:
TransVix is currently seeking approval from the U.S. Commodity Futures Trading Commission (photo courtesy of American Trucking Associations) TransVix is currently seeking approval from the U.S. Commodity Futures Trading Commission (photo courtesy of American Trucking Associations)

Tennessee-based startup TransVix believes it can transform the U.S. trucking industry by creating the nation’s first trucking futures exchange. The idea is so new to Indiana trucking companies that some executives are scratching their heads, pondering if they would use it and how it could impact their business landscape—already heavy with challenges. Spot prices in the trucking industry are riddled with volatility; TransVix believes a futures exchange will help companies manage the price risk that has long been part of hauling freight.

Eli McCormick, president and chief executive officer of Vincennes-based Bestway Express says, generally, trucking companies can be divided into two categories: those that haul for the spot market, and others that operate in the contractual market. McCormick believes companies operating in the spot market would benefit most from a trucking futures exchange.

“In the spot market, pricing can change as much as 40 percent or so within a given week. That’s a big number if you think about it,” says McCormick. “For example, the lane from Los Angeles to Dallas—one week you might be getting $1.50 per mile, but then for whatever reason, that can change based on a number of things, capacity being one of them. The following week, that rate might be $1.25.”

TransVix says those swings in line haul freight rates can be caused by weather, seasonality, regulations and macroeconomics. It believes a trucking futures exchange would provide trucking companies, shippers and third-party logistics providers (3PLs) hedging options to manage price risk. The company is led by “serial entrepreneur” and “trucking alum” Craig Fuller, who has created two businesses that serve the long-haul trucking industry.

McCormick says Bestway Express operates primarily in the contractual market; he believes 3PLs would be most interested in a trucking futures exchange.

It’s a similar perspective at Indianapolis-based Venture Logistics, which operates about 1,000 trucks, almost entirely in the contractual market. Venture Logistics President Greg Eddy believes a trucking futures exchange is an “opportunity for companies with the scale or data intelligence to protect themselves against spot market spikes.”

“Unfortunately, guys like myself and other carriers—without the scale or data intelligence who have all the skin in the game with the assets, ever-rising variable costs and margin pressures—are subjected to yet another instrument initiated by people who have no skin in the game and want to prosper in an already-commoditized marketplace.”

TransVix’ website says it is currently seeking approval from the U.S. Commodity Futures Trading Commission and aims to be operating by the fourth quarter of 2017.

“I understand the concept and possibly the need for it,” says McCormick. “We’re in a business where every penny counts. If you have volatility in the market and there’s any possible way, depending on your size, that you can hedge on anything, at the end of the day, there’s probably a need for it. Like anything else, it’s probably going to benefit some and be a disadvantage to others.”

McCormick says he understands how the trucking futures exchange could be beneficial to specific companies in the trucking industry.
  • Perspectives

    • 5 Things Consumers Should Know About Marketplace Health Insurance

      Open Enrollment is upon consumers again and there are likely questions on what they should do in terms of health care coverage for 2020. Options for coverage can be overwhelming, but consumers can choose a plan that fits them best through education on open enrollment, understanding what’s new in terms of health plans and learning of any changes going into 2020.

    More

Subscribe

Name:
Company Name:
Email:
Confirm Email:
HTML
INside Edge
Morning Briefing
BigWigs & New Gigs
Life Sciences Indiana
Indiana Connections
INPower
Subscribe
Unsubscribe

Events



  • Most Popular Stories

    • An abandoned East Chicago neighborhood is fenced off for safety. (photo ctsy: The Times of Northwest Indiana)

      New Housing Coming to East Chicago

      The Indiana Housing & Community Development Authority has selected a Chicago nonprofit to participate in a new workforce housing program in East Chicago, according to our partners at The Times of Northwest Indiana. The nonprofit organization A Safe Haven Foundation was awarded a $700,000 grant from the IHCDA that will support the new construction of single-family homes in the West Calumet neighborhood. 

    • (photo courtesy Joseph Pete/The Times of Northwest Indiana)

      ArcelorMittal to Idle Furnace at Indiana Harbor West

      ArcelorMittal plans to idle a blast furnace at its Indiana Harbor West in East Chicago. A spokesperson tells our partners at The Times of Northwest Indiana employees will be reassigned and there will be no layoffs as a result of the move. 

    • A New Way of Thinking for Drug Addiction Recovery

      The long war against drug addiction continues to rage, with the opioid crisis representing the latest front of the battle. As with any long fight, our strategy must change as the forces of death and destruction find new ways to attack those most vulnerable. According to the Centers for Disease Control and Prevention, 68% of the 70,200 drug overdose deaths in 2017 involved an opioid – six times higher than in 1999.

    • Graduates from the 1st cohort for manufacturing at Branchville Correctional Facility (photo ctsy: Dept of Corrections)

      Manufacturing Skills Training for Inmates

      The Indiana Department of Correction is trying to help fill voids in the state’s manufacturing workforce by preparing and training low-risk inmates before they are released. Branchville Correctional Facility in downstate Perry County just graduated its first cohort of the Catapult Training Program, following a four-week course in basic manufacturing skills. The facility is classified as a Level II Low Medium Security Correctional Facility. In an interview with...

    • Calumet Specialty Sells Texas Refinery

      Indianapolis-based Calumet Specialty Products Partners (Nasdaq: CLMT) has closed on the sale of its San Antonio,Texas refinery, crude oil terminal and pipeline to Starlight Relativity Acquisition Co. LLC. Starlight agreed to pay $63 million in cash for the plant, property and equipment.