On Friday morning at FreightWaves’ Market Street headquarters in Chattanooga, executives from DAT, Nodal Exchange, J.B. Hunt (NASDAQ: JBHT), as well as former U.S. Senator Bob Corker (R-TN), spoke to a large audience about the problems in the transportation and logistics industry that led to the creation of trucking freight futures.
Claude Pumilia, the chief executive officer of DAT, talked about the incumbent loadboard’s decision to embrace the future of finance and technology in transportation.
“We’re a forty year old company with a great position in the marketplace, and we asked ourselves ‘is this something we want to give involved in?’” Pumilia said. “The more I spoke to Craig, the more excited I got. It’s now a natural fit, and we’re really excited to participate in this thing that I think is going to be an historic change in trucking.”
Pumilia also gave some background on DAT’s RateView product, which was launched in 2010 and generates the price assessments that trucking freight futures contracts will be settled against.
RateView has more brokers and carriers than any other network in the marketplace, Pumilia said, with $60 billion worth of freight and more than 800 companies’ accounting systems feeding into DAT’s database. That wealth of information has allowed DAT to build a trustworthy index for truckload spot pricing that freight futures traders can rely on.
“We don’t venture into this kind of thing lightly; we did due diligence, thought about it hard, and see it as a phenomenal opportunity,” Pumilia said.
Officials from Nodal Exchange said that they were impressed by the size of the opportunity in the trucking spot market.
“We’re thrilled to be providing transparency, liquidity, and risk management to the trucking industry, the backbone of the U.S. economy,” said Demetri Karousos, chief operating officer of Nodal Exchange and chief risk officer at Nodal Clear.
Shelley Simpson, executive vice president and chief commercial officer of J. B. Hunt, and president of Highway Services, took the stage to praise FreightWaves, DAT, and Nodal Exchange for bringing high-quality information into the freight marketplace. Simpson said that J. B. Hunt is similarly committed to freight market transparency.
“So many things today made me think about Mr Hunt, who never met an idea he didn’t like,” Simpson said. “He listened to the ideas and allowed the dream to occur. We need dreamers who can push the industry forward.”
“We are big users of FreightWaves SONAR, and big users of DAT,” Simpson continued. “We believe the market is inefficient because of a lack of transparency and visibility. We want prediction to occur around transparent information and continue to get better as an organization and an industry.”
In an interview, Simpson said that J. B. Hunt 360 was so popular and sticky with its users because it provided unbiased market information they could trust. J. B. Hunt realized that to achieve the scale it needed to create a truly liquid marketplace, it would have to offer its customers and carriers something in return—transparent information about loads, available capacity, and all of the offers on a given load.
“Our objective in J. B. Hunt 360 is to create the most efficient transportation network in North America,” Simpson said. “To do that we have to see all shipments and capacity, and eliminate waste. So scale matters.”
To achieve scale, Simpson said, the app saves carriers money, enables them to spend more time driving, and creates a better experience for the driver. She added that the app has 34,000 facility locations with approximately 213,000 driver reviews of those locations, which lets carriers know what they can expect and allows them to price accordingly.
Simpson said that in 2018, $550 million worth of freight transactions flowed through 360, and that by the end of this summer the digital brokerage app would be on a $1.2-1.3 billion dollar run rate.
Finally, former Chattanooga mayor and U.S. Senator Bob Corker spoke about the transportation industry and Chattanooga’s entrepreneurial community.
“I’m glad to see industry participants coming together and talking about mutual issues you have to deal with,” Corker said. When he sat on the board of U.S. Xpress (NYSE: USX), Corker said, he acquired an understanding of the complexities of the transportation industry, from finding qualified drivers to appropriate capex, oversupply in the marketplace, fuel prices, and regulation.
“When Craig had me over six weeks ago to show me what’s he doing, I saw his infectious enthusiasm and his team,” Corker said, recounting his excitement about “putting together a company that is the place for industry information, trends, and what’s happening on a daily basis.”
Shortly after Corker finished speaking, tractors from local transportation companies blared their horns and trading of trucking freight futures commenced. The first transaction went through a few minutes later, pricing April 2019 national average dry van spot rates at $1.34/mile.