Lakefront: hedging trucking rate risk could raise public carrier valuations



Lakefront Futures & Options, a Chicago-based brokerage and trading firm with 16 regional offices, recently launched a Trucking & Freight Derivatives Group to help its clients use trucking freight futures and other risk management tools, including fuel hedging, spot market pricing, and contract or ‘forward’ rates. 
Gary Saykaly joined Lakefront to head up the new practice as senior vice president of Trucking & Freight Derivatives. Saykaly, based in Atlanta, is a former freight broker with 25 years of experience in commercial real estate and investment banking. Lakefront, founded in 1997, trades many classes of commodities and futures contracts, including currencies, energy, livestock, metals, grains, softs, and indexes.
Saykaly will help transportation industry participants and financial speculators assess the opportunity presented by trucking freight futures contracts traded on the Nodal Exchange. 
FreightWaves spoke to Saykaly by phone.
Saykaly said that he left investment banking to look for another industry where market inefficiencies and a lack of transparency created arbitrage opportunities. Freight brokerage satisfied those conditions, so Saykaly opened up a Landstar agency, Phoenician Logistics, where he worked as both the owner and managing director of business development for three years in order to learn the business.
“I had to roll up my sleeves, looking at trucking rates and how supply and demand conditions change,” Saykaly said. “It was a good way to build deep relationships with carriers and shippers, by being in the spot market every day.”
While he was selling capacity to shippers and covering loads, Saykaly was waiting for the launch of trucking freight futures contracts, a joint venture between DAT, the Nodal Exchange, and FreightWaves. 
In one market update email to his customers, Saykaly built a chart showing how falling spot rates and rising diesel fuel costs would put pressure on trucking carriers. Then he superimposed a graph of the Dow Jones Trucking Index, which perfectly mirrored the increasingly unfavorable market conditions faced by carriers.

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