BY MARK B. SOLOMON, EXECUTIVE EDITOR–NEWS
MOTOR FREIGHT
Transportation Report
TRUST AND TRANSPARENCY
are words not normally associated
with truckload pricing. Contracts
between shippers, brokers, or
third-party logistics service providers (3PLs) and carriers in the
$700 billion-a-year business are
difficult to enforce and routinely
disregarded. Shippers often don’t
honor volume commitments and
have been known to kick a carrier to
the curb if they can get a lower price
elsewhere. Carriers can be just as
fair-weather, turning their wheels
in another direction if more profitable loads come along, especially
during weak pricing cycles. Shippers and their brokers are
then forced to search carrier routing guides for alternative
capacity. Failing that, they turn to the volatile non-con-tract, or spot, market, hoping to find trucks at prices they
can live with.
Enter Craig Fuller, armed with terabytes of pricing data
and an abiding faith in Adam Smith’s “invisible hand” of
the free market. By forming a company called TransRisk
to trade futures contracts for spot truckload pricing,
Fuller, part of the third generation of the Chattanooga,
Tenn., family that founded truckload giant U.S. Xpress
Enterprises Inc., hopes to establish a mechanism allowing
participants to hedge the direction of spot rates and man-
age price risk. By doing so, they can protect their margins
against sharp up and down moves in spot rates and the
market’s reactions to them, he said. Fuller plans to go live
with the platform during mid- to late-2018.
The objective, Fuller said, is to inject honest dealing
into what he called a “liar’s poker” atmosphere, where
bidding, bluffing, and deception are intertwined in a
zero-sum game where one side gains at the expense of the
other. TransRisk will let the marketplace determine prices, Fuller said. By creating an open, tradable market with
transparent price discovery, shippers, brokers, and carriers “could be much more honest about their demand and
capacity,” he said in an interview. This will spawn better
Taming the spot
market beast
Startup TransRisk aims to
introduce order into the
often-chaotic truckload
spot market.
