HK1087229A - Freight fulfillment and trading platform - Google Patents

Description

Freight fulfillment and trading platform

The present application claims priority from application number 60/457,164, "free Future transfer Rules of Engagement", filed on 25.3.2003 by the inventor of the present application, application number 60/457,167, filed on 25.3.2003 by the inventor of the present application, "Presenting Future and Options in flight", application number 60/457,166, filed on 25.3.2003 by the applicant of the present application, "free Future user Interface", filed on 25.3.2003 by the applicant of the present application, application number 60/457,165, filed on 25.3.2003 by the applicant of the present application, "standard discrimination of free Capacity", application number 60/457,163, filed on 25.3.2003 by the applicant, all of which are assigned to the same assignee of free Future, and all of which are incorporated herein by reference.

Background

The freight industry involves the use of multiple modes of transportation to transport goods (e.g., bulk goods, liquids, containers, etc.) between destinations. Over the years, the industry has developed that most of today's transports typically involve four major participants: 1) carriers, operating transport equipment, 2) shippers, tending to be producers of the goods being transported, 3) forwarders, aggregating the goods from shippers to more efficiently utilize the capacity offered by carriers between endpoints, and 4) market makers (market makers), deriving benefits from the trading of shipping contracts, but improving the liquidity of the shipping market as a by-product of their participation.

Multiple mode freight industry

Shipment between any two destinations may involve multiple modes of transportation and multiple possible routes selected. For ease of discussion, fig. 1A shows some hypothetical shippers, forwarders, and carriers involved in shipping between Hong Kong (Hong Kong, abbreviated HKG) and Reno, Nevada (Reno, Nevada). In this example, shipper 102 and shipper 104 may utilize trucks to ship the goods to forwarder 106 at Hong Kong and then to the receiving entity at Reno. Depending on the nature of the goods to be shipped, the shipping requirements specified by the shipper, and other factors, the forwarder 106 typically attempts to find the lowest cost shipping method that can fulfill the shipping order.

For example, the forwarder 106 may choose to send the cargo to a warehouse of San Francisco Airport (San Francisco Airport, abbreviated as SFO) via Alaska by air transport (108). From SFO, cargo may be transported to Reno by air (110) or may be sent to Reno by trucks (112a and 112b) via Sacramento (sakeleton, abbreviated SAC). The forwarder 106 may also choose to ship to Oakland port (OAK for short) by sea (114). From OAK, cargo may be transported by trucks (116 and 112b) to Reno via sacrmento (sac). Alternatively, the forwarder 106 may choose to ship to Los Angeles (LAX for short) by air (118). From the LAX, cargo may be transported directly to Reno via trucks (120 and 112b) via Sacramento (SAC) or via air transport (122). It can be appreciated from fig. 1A that freight transportation involves a variety of modes (e.g., sea, air, or truck) and routes.

Long term contract and spot market purchases

Generally speaking, the relationship between shippers, forwarders, and carriers has historically been governed by two mechanisms: spot market purchases and long-term contracts. For ease of discussion, fig. 1B illustrates the relationship between the forwarder 130 and the carrier 132, which is governed by the spot market purchase 136 and the long-term contract 134. The forwarder 130 may wish to enter into a long-term contract 134 with the carrier 132 to lock in the price and guarantee forward capacity. Likewise, the carrier 132 may wish to lock the price and guarantee that capacity is sold in advance to minimize the risk of underutilization. For example, a long-term contract may be an agreement to purchase 30 tons of freight $3.00 per ton on a ship from Hong Kong to OAK for 6 months from the date the long-term contract was signed.

Spot market purchases represent purchases of the capacity required by the forwarder 130 to recently ship goods. For example, a buy-in spot may be a purchase of 20 tons of shipping capacity off-board a ship from Hong Kong to OAK within two days. Depending on the habits of the particular industry sector concerned, the time span between the time of making the spot market purchase and the time of transporting the goods may be only a few hours to allow loading, or may be a week or more. In making spot market purchases, the forwarder 130 typically must pay the price that the market will bear at the time.

Capacity and pricing risk

The decision as to which way and which route to use for a particular shipment of goods is complex, involving factors such as the maximum allowable transit time, the price paid by the shipper, and the availability of shipping capacity from the carrier (the decision itself is complex and may involve factors such as the nature of the goods being shipped, weather, fuel costs, labor utilization, etc.). Likewise, the decision as to whether to utilize long-term contracts, spot-market purchases, or a combination thereof to fulfill a shipping order is complex, involving numerous factors. These factors are constantly changing and thus pricing and capacity risk to shippers, forwarders, and carriers are constantly being addressed.

For shippers, the ability to transport goods timely is of paramount concern. Some shippers cannot tolerate capacity shortages, which is a condition characterized by insufficient capacity to transport goods in a timely manner. To minimize this risk, shippers are willing to enter into long-term contracts with forwarders or carriers to guarantee capacity for certain critical shipments at a forward date.

Another risk is over-purchasing, which may occur when a shipper purchases more capacity under a long-term contract than is needed at shipment. To reduce the risk of over-purchasing, shippers may purchase less than the required capacity under long term contracts, and may make up for the difference using spot market purchases.

Both long-term contracts and spot-market purchases involve pricing risks. For example, at the time of shipping, the spot-market price may be much higher than the long-term contract price, making spot-market purchases prohibitively expensive for the buyer (e.g., whether the forwarder addresses capacity shortages through spot-market purchases). Conversely, the spot market price may be much lower than the long-term contract price. In this case, it can be said that the buyer pays too much in the lower risk transaction for capacity starvation.

Of course, forwarders would like to maximize profits by purchasing shipping capacity from the carrier at the lowest possible cost and selling the capacity to the shipper when the highest price is available. If the forwarder miscalculates and purchases little capacity from the carrier, the forwarder risks not fulfilling the existing long-term contract with the shipper. As such, forwarders must purchase capacity on the spot market to make up for the difference in shipment. Further, at the time of shipping, the spot-market price may be much higher than the price of the long-term contract with the shipper, reducing or eliminating any profit for the forwarder. Conversely, the spot market price may be much lower than the price of a long-term contract with the shipper. In this case, forwarders benefit from the availability of capacity purchased at very low spot market prices to fulfill existing long-term contracts with shippers.

The same considerations exist between forwarders and carriers. If the forwarder miscalculates and purchases little capacity from the carrier, the forwarder risks not fulfilling the existing long-term contract with the shipper. As such, forwarders must purchase capacity on the spot market to make up for the difference in shipment. Further, at the time of shipping, the spot-market price may be much higher than the long-term contract price with the shipper, reducing or eliminating any profit to the forwarder. Conversely, spot market prices may be much lower than the prices of long-term contracts with shippers. In this case, forwarders benefit from the availability of contracts with capacity purchased at very low spot market prices.

Carriers have fixed assets in the form of vehicles (e.g., planes, trains, trucks, ships) that must be taken off-line on time whether or not the capacity is sold, as well as perishable products. As a result, carriers are often very concerned with selling all of the available capacity before the departure time. Using long-term contracts with forwarders will reduce the potential profit for the carrier when it is guaranteed that capacity will be sold. This is because the profit margin per shipping unit for a long-term contract is typically (but not always) lower than what is available when sold on the spot market.

The potential profit margin for the carrier may be reduced by factors that are not controlled by the carrier. For example, war, changes in fuel prices, changes in haul routes (e.g., which affect the number of airplanes flying between two destinations), labor strikes, etc. may affect the overall availability of capacity, causing fluctuations in spot market pricing. If, at the time of shipment, the spot-market price is much higher than the price of a long-term contract with the forwarder, every ton of goods shipped under the long-term contract, rather than being purchased in the spot-market, reduces the profit the forwarder has gained. Conversely, spot market prices may be much lower than long-term contract prices with forwarders. If the carrier does not fill the carrier with long-term contract goods, the carrier needs to sell the remaining capacity on the spot market, in effect, shipping some lower priced goods than the carrier can obtain under long-term contracts.

Fig. 1C and 1D illustrate the concept of pricing risk and capacity risk. As shown in fig. 1C, if the forwarder incorrectly speculates, and at the time of execution T1 of fig. 1C, the price is $2.00 per ton on the spot market, the forwarder actually pays $1.00 more per ton for the capacity employed. On the other hand, if the price was $5.00 per ton on the spot market at the time of execution of T1, the carrier would lose $2.00 per ton of potential profit for the shipment executed under long-term contract rather than in the spot market order.

With regard to capacity risk, as shown in the example of fig. 1D, if a forwarder cannot guarantee sufficient capacity through a long-term contract, the forwarder may be forced to purchase the remaining required capacity on the spot market, if possible. In some cases, there is capacity on the spot market, but such capacity can be very expensive when purchased on a short notice (short notice). In other cases, there may not be capacity at any price.

Unequal access to information

Although the participants all have risks, each participant has a different risk level and risk type. This is due in part to the different types and qualities of information available to each participant.

Factors that influence the decision making process for shippers and forwarders in connection with freight transportation are taken into account. Forwarders and shippers base their freight transportation decisions in part on their best guesses (e.g., long-term contract versus spot contract, price, capacity, etc.), where these guesses are related to the total demand from all shippers and the total shipping capacity at the time of transportation.

If the total shipping capacity from shippers is high at the time of shipment, spot market prices will also tend to be high due to the competition between shippers and forwarders for available shipping capacity. The total demand from the shipper may depend on factors such as the demand for goods by the consumer, inventory levels of the retailer, and the like. Shippers tend to have the most information about current and predicted shipping capacity, followed by forwarders, and then carriers. Line 180 on the graph of FIG. 1E shows the distribution of shipping capacity information among shippers, forwarders, and carriers. Since carrier 174 owns fixed, perishable assets in the form of departure vehicles, the carrier is at the highest risk due to incorrect forecasts of shipping capacity. This situation is illustrated by line 182 of FIG. 1E.

The available capacity from the carrier must also be taken into account. Factors such as weather, war, labor strikes, fuel costs, shipping routes, etc., all determine the shipping capacity available at any given point in time. Naturally, carriers 174 are deeply aware of their own capacity and capacity trends over time, and therefore have margins beyond forwarder 172 and shipper 170 in determining current capacity and predicting future capacity. This situation is illustrated by line 184 of FIG. 1E. Shipper 170 bears the highest risk of capacity associated because shipper 170 has the highest risk if there is not enough capacity to ship the goods when needed (e.g., capacity starvation). This is illustrated by line 186 of FIG. 1E.

Some known methods

Attempts have been made to simplify the process of matching buyers and sellers in the shipping industry. Instead of shippers, forwarders, and carriers negotiating long-term contracts directly with each other and making spot purchases, electronic transactions have been created. Using modern computers and world wide networks such as the Internet, sellers can publish (post) available capacity and buyers can publish orders for viewing. Tools may also be utilized to match orders to capacity based on published terms so that buyers and sellers can effectively discover each other.

Fig. 2 illustrates a prior art electronic transaction 202 that facilitates trading between a carrier 204, a forwarder 206, and a shipper 208. Through electronic trading 202, carrier 204 may publish future capacity and a defined price 210 (e.g., 300 tons of capacity from Hong Kong to Oakland, available at 10 months 6 of 2003, no less than $1.50 per ton). The forwarder 206 or shipper 208 may utilize this publication to meet their shipping needs. Forwarder 206 may likewise publish available capacity (and desired price) 212 for earlier purchases or a desired capacity (and maximum price) 214 for desired purchases. Shipper 208 may similarly post shipment orders and limit prices 216 using electronic exchange 202 (e.g., 300 tons capacity from Hong Kong to Oakland, available at 10 months 6 in 2004, no more than $1.60 per ton). Utilizing the matching algorithm, the electronic transaction 202 may then match the buyer (e.g., the shipper or the forwarder) with the seller (e.g., the carrier or the forwarder). The matches are communicated to the parties by arrows 232, 234, and 236 as shown.

In addition to facilitating direct purchases of capacity between buyers and sellers, known as futures contract trading, electronic trading systems facilitate the trading of futures in capacity between particular destinations. Futures contracts, which are well known in the goods industry, are contracts made between two parties to specify contract terms to be fulfilled at a particular point in time in the future. For example, a futures contract for bulk shipments may specify 100 tons of bulk cargo transported from Hong Kong to Oakland $1.80 per ton for a 7-month 1-day departure from 2004. In this case, the capacity futures are treated in the same way as well-known futures such as coffee, pork, salt, etc. Moreover, individuals in the capacity futures market, like their counterparts in the agricultural futures market, may utilize futures contracts into speculating and profitability regarding freight transportation related deals with particular destinations. A variant of futures trading is exponential trading, where an index of the trading prices (or a weighted average or mean between high and low prices) is calculated in real time. In practice, the trader may place a bet on the future index value, with the benefit or loss being proportional to the difference between the value estimated by the trader (strike) and the actual value, on a pre-agreed date. Index futures are cash settled and routinely used in the financial industry to control risk.

Although the prior art electronic transaction 202 is useful for matching buyers with sellers, it has disadvantages. Existing prior art electronic trading systems are of a single form, i.e. limited to marine transportation of bulk cargo. These two electronic transactions are known to the inventors: imarex (www.Imarex.com) and Baltic Exchange (www.balticexchange.com). This type of prior art electronic trading is not well suited to handle transportation between destinations that can be served by multiple modes of transportation (i.e., sea, truck, train, or air) and/or between destinations that can be shipped through different intermediate shipping points (e.g., Alaska, San Francisco, Los Angeles, Oakland, Sacramento in the above example of fig. 1A).

In addition, participants in such electronic transactions suffer from the uneven distribution of information described above. For example, carriers also suffer from the deficiency of reliable information about shipping capacity, and even though their published orders can be more easily matched through existing electronic trading systems, shippers still do not have reliable information about capacity. This lack of reliable information also affects the ability of speculative futures traders (referred to herein as market makers) to rationally estimate trading in capacity futures, leaving some traders to avoid fully or completely participating in the capacity futures market. Subsequently, the flowability is affected.

The inherent inefficiency in the freight market creates opportunities for electronic capacity aggregators (aggregators). As the inventors know, electronic capacity aggregators, such as those tried by the acron Corporation of Houston, Texas, which is not presently available, attempt to create shortfalls by purchasing a high percentage of trucking capacity between two destinations (e.g., between Austin, Texas, and San Jose, CA). Capacity is purchased through futures contracts from carriers and then electronic capacity aggregators attempt to resell capacity to forwarders (and possibly even shippers) to obtain profits.

Such an electronic clearinghouse (clearinghouse) can minimize pricing risk itself by imposing advanced market control, i.e., by the available trucking capacity. In other words, by concentrating the majority of trucking capacity between two destinations under their control, the electronic clearinghouse has nearly complete information about the shipping capacity available between the two destinations, and can create false shortfalls and maximize profits by controlling the release of now scarce goods to forwarders and shippers.

Furthermore, this modality has limited application and does not address the information disparity between existing participants or the multi-modality nature of the freight industry. Although some may consider the use of an electronic clearinghouse to provide participants with public pricing information so that they know what capacity is for any particular route, on any particular date, it can also be considered that the configuration of such a clearinghouse increases the risk of abuse if the clearinghouse has full or nearly full control over the shipping capacity between any two endpoints.

Disclosure of Invention

In an embodiment, the present invention relates to a network-based, computer-implemented method for enabling multiple forms of freight transportation involving at least two modes of transportation between a first location and a second location. Including receiving a derivative purchase request for capacity between a first location and a second location, the derivative purchase request having contractual requirements specifying at least shipping capacity and execution time. Further comprising determining a plurality of potentially suitable derivative contracts that meet the contract requirements from a database of available derivative contracts. Further comprising selecting a subset of the plurality of potentially suitable derivative contracts to satisfy the derivative purchase request, the subset including at least a first derivative contract for a first mode of the two transportation modes and a second derivative contract for a second mode of the two transportation modes.

In an embodiment, the present invention further includes receiving data regarding capacity releases from shippers, each capacity release specifying a shipping capacity and a start point and an end point, each capacity release further specifying performance details including one of a departure time, a transit time, and an arrival time. Further, the present invention includes bundling selected ones of the capacity releases into (bundle) available derivative contracts, wherein at least one of the valid derivative contracts includes a plurality of capacity releases.

In an embodiment, bundling includes grouping capacity releases related to geographically proximate start and end points. In an embodiment, bundling additionally or alternatively includes grouping capacity releases that fall within a predetermined time window.

In an embodiment, the present invention further includes providing a regulated marketing mechanism (facility) for allowing a buyer of capacity between a first location and a second location to trade a particular component of a subset of a plurality of potentially suitable derivative contracts with other participants in the shipping industry in accordance with the subset of the plurality of potentially suitable derivative contracts.

In an embodiment, the present invention further comprises receiving a shipment forecast for a potential futures shipment and a self-assessed quality level associated with the shipment forecast. Further, the method includes aggregating the shipment forecasts and quality levels into an aggregate shipment forecast and aggregate quality level. Further, providing the total shipment forecast and the total quality rating to a trader to enable the trader to estimate a capacity of the derived contract to be purchased, the trader representing one of a market maker, a forwarder, and a carrier.

In an embodiment, a self-assessed quality level of the plurality of self-assessed quality levels relates to a shipper's self-assessment of a set of criteria including demand, manufacturing readiness (readesses), manufacturing location, capacity, product, lane, and lane stability.

In an embodiment, the invention further comprises calculating a quality level for the shipment forecast, the quality level based on at least historical data for past shipment forecasts and past actual shipment volumes. Further comprising aggregating the quality classes into an overall quality class. Also included is providing the total quality rating to the trader.

In an embodiment, the present invention further includes providing a derivative contract trading mechanism to enable market makers to electronically trade the first derivative contract and the second derivative contract prior to expiration.

In an embodiment, the present invention further comprises providing data regarding the first derivative contract and the second derivative contract to the electronic reservation system to reserve capacity for shipment using the first mode and the second mode, respectively, in dependence upon the execution time of the first derivative contract.

In an embodiment, the present invention further comprises calculating a freight index based on historical freight volumes between the first location and the second location. Further comprising providing the total shipment forecast and the total quality rating to a trader, the trader representing one of the market makers, the forwarders, and the carriers.

The present invention also includes other computer-implemented techniques for fulfilling shipping orders and facilitating trading in capacity futures and/or options involving shippers, forwarders, carriers, and market makers, as will be described in detail below. In addition, the present invention includes computer hardware, computer networks, and computer software for electronically fulfilling shipping orders and facilitating trading in capacity futures and/or options involving shippers, forwarders, carriers, and market makers, as will be described in detail below.

These and other features of the present invention will be described in the following detailed description of the invention and in conjunction with the following figures.

Drawings

The present invention will be described by way of example, and not by way of limitation, in the figures of the accompanying drawings and in which like reference numerals refer to similar elements and in which:

FIG. 1A illustrates some hypothetical shippers, forwarders, and carriers involved in transporting between Hong Kong (HKG) and Reno, Nevada (Reno), using a variety of possible approaches and a variety of alternative routes.

FIG. 1B illustrates the relationship between forwarder and carrier, governed in part by spot market purchases and long-term contracts.

Fig. 1C and 1D are examples of discussions that facilitate the concept of pricing risk and capacity risk.

Fig. 1E shows the existing distribution of information and risk among participants.

Figure 2 illustrates a prior art electronic transaction that facilitates commerce between a carrier, a forwarder, and a shipper.

FIG. 3 illustrates the high level functional architecture of the FutureFright system according to an embodiment of the invention.

Fig. 4A shows a typical prediction from a single shipper over time for an end-to-end route.

Fig. 4B is a graph illustrating a typical mix of long-term contracts, futures, options, and spot market purchases that can achieve a demand for shipping as predicted by a function of time.

Fig. 4C illustrates how the demand for capacity from a given shipment order of a shipper is achieved through a mix of long-term contracts, futures contracts, options contracts, and spot market purchases using the risk management tools provided by the FFS.

Fig. 5A is a graph showing the relationship between time measured by the number of futures contracts sold and capacity released for any particular section.

Fig. 5B shows a graph similar to fig. 5A with option data lines shown.

FIG. 6 shows an equation used in an embodiment to calculate an index for a particular manner between two geographic points over a particular time period.

Fig. 7 conceptually illustrates how FFS facilitates and encourages trading of capacity futures according to an embodiment of the invention.

Fig. 8A and 8B illustrate how the FutureFreight system implements a hypothetical Hong Kong-Reno multi-mode shipment order with all participants participating in accordance with one embodiment of the present invention.

Figure 9 illustrates a process for market makers to limit risk to carriers in an embodiment.

Fig. 10A and 10B illustrate an order fulfillment process for carriers and forwarders according to an embodiment of the present invention.

FIG. 11 illustrates a contract template for allowing a participant to specify a new contract to buy or sell to FutureFright, according to one embodiment.

Fig. 12A illustrates a control panel as seen by a carrier when trading futures according to one embodiment.

Fig. 12B shows a control panel as seen by a carrier when trading futures, according to one embodiment.

FIG. 12C illustrates a control panel as seen by a carrier when transacting rights according to one embodiment.

Fig. 12D illustrates a control panel for trading components between the expiration of futures contracts at time and their execution, according to one embodiment.

Fig. 13 illustrates a tool for allowing a shipper to specify Shipper Confidence Level (SCL), according to one embodiment.

FIG. 14 illustrates various factors including Shipper Credibility (SCL) according to one embodiment.

Figure 15 illustrates how FFS calculates the predicted quality and quantity estimates for shippers, according to one embodiment of the present invention.

Detailed Description

The present invention will now be described in detail with reference to a few preferred embodiments thereof as illustrated in the accompanying drawings. In the following description, numerous details are set forth to provide a thorough understanding of the present invention. It will be apparent, however, to one skilled in the art, that the present invention may be practiced without some or all of these specific details. In other instances, well known process steps and/or structures have not been described in detail in order to not unnecessarily obscure the present invention.

In accordance with embodiments of the present invention, a networked multi-modal, multi-route freight transaction and trading system (referred to herein as the FutureFreight system or FFS) is provided that allows shippers, carriers, and forwarders to more efficiently conduct freight-related transactions, as well as allows market makers to more fully participate in the freight market. With the products created by the FFS, the participation of market makers improves the liquidity of the freight market to a degree heretofore unattainable.

In an embodiment, the FFS takes into account the various formal characteristics of the shipping industry and can readily fulfill the package order using one or more modes of transportation (e.g., air, sea, trucking, and/or rail). Furthermore, FFS allows for routing between two endpoints to be accomplished using multiple intermediate transit points. By considering the two issues above, the FFS can provide more options to shippers, forwarders, and carriers to fulfill shipping orders.

To illustrate this, refer to the example of fig. 1. Unlike prior art electronic trading systems that only handle a single mode (i.e., ocean-going bulk cargo as through Imarex or BalticExchange websites), FFS allows for an alternative mode in routing between endpoints. Various alternatives (e.g., air versus sea between Hong Kong and San Francisco) increase the number of carriers that can service a particular shipping order, which increases capacity and competition. Moreover, the FFS can utilize any intermediate destination (e.g., Alaska, SFO, LAX, SAC) in view of routing between Hong Kong and Reno. The combination of multiple alternative routes and multiple alternatives further increases the number of shippers and carriers that can fulfill a particular shipping order.

FFS is well suited to provide liquidity in capacity futures trading. By increasing the number of selections available to fulfill an order, a large number of futures contracts may be created and traded, which increases liquidity. Due to the improved liquidity, the market operates more efficiently, resulting in potential cost reductions, fairer pricing, and reduced risk to shippers, forwarders, and carriers.

In an embodiment, the FFS provides a tool for breaking up routes associated with an order into component parts. The components may then be bundled to add transactions. Tools are also provided for combining the portions into an end-to-end route for executing the contract when executed. If any component of the combined end-to-end route is not desired by the shipper, forwarder, or carrier, the components may be traded in a regulated market trading mechanism provided by the FFS.

To illustrate this, reference is again made to fig. 1. In FIG. 1, if the entire end-to-end route between Hong Kong and Reno is considered an atomic unit for trading purposes, there are a limited number of orders for Hong Kong to Reno for any particular date in the future. This is because Reno is a relatively remote destination and it is believed that only a small percentage of shipments generated daily are transported to Reno.

However, if an order (purchased or sold from any participant) can be broken up into parts, and each of these parts is considered an atomic unit for trading purposes, there are a large number of similar parts to and between different intermediate points. For example, transportation orders between Beijing, China to Salt Lake City, Utah may also pass by Hong Kong and SFO. The Hong Kong-SFO section of the orders of Beijing-Salt Lake City may be combined with the Hong Kong-SFO section of the aforementioned Hong Kong-Reno orders for trading purposes in a larger futures contract between Hong Kong and SFO.

Thousands of orders may be similarly broken down and combined using any combination of means and intermediate points to create a variety of bundled, tradable futures contracts. Geo-grouping can also be utilized to increase the size of the bundle, if desired. For example, components from HongKong-SFO may be bundled together with components from Taiwan to Oakland in East Asia/America West Coast bundling. Time-based grouping may also be employed. For example, if a component (e.g., HongKong-SFO) appears as two endpoints in a predetermined or programmable time window (e.g., three days, one week, two weeks, one month, etc.), the components as the two endpoints may be bundled. Additionally or alternatively, both time-based grouping and geo-grouping or bundling (e.g., all components from East Asia to America West Coast 3 months 2004) may also be utilized to increase the value in each tradeable futures contract. Additionally or alternatively, the binding or grouping may be applied to end-to-end shipping orders without first breaking the order into component parts.

By grouping or bundling, the capacity of each tradeable futures contract increases, subsequently increasing its potential profit and attractiveness to market makers. In this manner, the FFS increases market maker participation and, in the process, improves liquidity as buyers and sellers in the adjustment market can better ensure that various futures contracts are purchased, sold, and traded quickly.

Once the futures contracts expire and after the trading phase of the market makers is completed, the bundled portion may be unbundled (unbundle). As mentioned, the cracked sections can then be used to create a complete end-to-end order for booking different carriers for fulfillment. A regulated market mechanism is provided to allow forwarders to trade or exchange undesirable component legs (legs). For example, if the forwarder guarantees that the constituent leg of Taiwan-Oakland is part of a futures purchase, but is more interested in the Hong Kong to SFO constituent leg to serve the same East Asia/America West Coast shipping needs of a particular shipment order, the forwarder may utilize the adjustment market to effect trading or exchange after the expiration of the futures.

To further facilitate trading of freight (which may be long-term or spot market) and capacity futures, FFS also provides tools to collect freight volume and freight volume data, to qualitatively and quantitatively evaluate forecasts related to freight volume and freight volume, and to distribute this information among participants in a confidential, secure manner. Tools for allowing participants to analyze and control risk are also provided. As such, FFS seeks to reduce the disparity in the amount of information held by multiple participants. With improved information, participants are able to reduce pricing and capacity risks in applying futures, long-term contracts, and spot market purchases for handling freight shipments.

The features and advantages of the present invention will be better understood by reference to the following drawings and discussions. Fig. 3 illustrates a high-level functional structure of an FFS according to an embodiment of the present invention. FFS portal 302 is shown through which shipper 304, carrier 306, forwarder 308, and market maker 358 may conduct transactions. FFS portal 302 is typically an internet portal and may be implemented, for example, by a suitable network server.

The interface layer 310 facilitates communication between the portal 302 and a plurality of backend modules, where the interface layer may be implemented using static (HTML) interfaces and real-time (applet) interfaces in embodiments. These modules include, for example, a forecasted delivery module 322, a futures and options module 324, a regulated markets module 326, a routing module 328, a reporting module 330, a financial module 332, and a risk management module 334.

Predictive delivery module 322 represents a module for collecting capacity and shipping capacity data from carriers and shippers, respectively. Which may include historical data regarding capacity and shipping capacity, spot market data, and forecast data (which itself includes origin and destination identification, capacity, deadline, any constraints, etc.). The prediction engine then aggregates the data according to the needs of other data consumers, such as forwarders, carriers, or shippers.

For example, a forwarder may wish to obtain forecast data for a particular shipper within a particular time frame. As another example, a forwarder may wish to obtain forecast data for a set of shippers regarding shipments that depart from a particular location within a particular time frame. As another example, a carrier may wish to obtain forecast data for a particular form, a particular geographic portion, a particular area, etc. within a particular time limit.

The predictive delivery module 322, if appropriate, is combined with the risk assessment module 334 to calculate the risk associated with the predictive data. In an embodiment, a shipper may be required to provide a number of parameters (e.g., 8 in one case) that reflect the risk probability associated with various aspects of the forecast data. For example, risk probability parameters may include location, engineering age, route stability, capacity, and the like. These risk probability parameters are then aggregated into a single value called shipper confidence, which can then be utilized to quantify the risk level associated with the data provided from a particular shipper. In another embodiment, historical forecast data from a particular shipper (i.e., forecast data provided by a particular shipper in the past) is compared to historical actual shipment data from a particular shipper to determine a range of differences between the historical forecast data and the actual shipment data. These differences reflect the risks associated with the forecast data from a particular shipper when a certain number of instances are available.

The risk associated with the prediction can be calculated by several methods. For example, the provider of the forecast may provide a confidence level that is a self-estimate of the statistical likelihood that the forecast will represent the actual shipment. Confidence may be improved by providing the forecaster with a decision tree that lists the important causes of predictive variability and breaks down the process of estimating overall confidence to a lesser extent to make it easier to estimate confidence. There are inherent limitations to the approach used when estimating Risk (see, p5, "approximate of Risk", published by Alogists 1/24 to 30 2004, http:// www.economist.com/display. cfmstory id 2347791). Another approach is to compare historical predictions to historical facts. This approach has the advantage of eliminating artifacts and providing the ability to calculate risks for different time ranges and different sets of ratings. A two week forecast released over three months may contain different degrees of risk than the same forecast over two weeks. Likewise, a two week prediction, for example, may be more risky than a quarterly prediction. Historical methods may more accurately determine these differences and provide an unbiased tool for calculating risk.

As a central communication hub, FFS conveniently provides a ready platform for collecting and disseminating such forecast data, which will help different participants to control risks and help market makers make more accurate trading decisions. In one embodiment, forwarders may see data from their shipper customer with written permission only. In one embodiment, only summary data across routes is possible for the carrier. In one embodiment, the data that is not shared is based on the total capacity of the carrier and the demand of the non-consumer shipper.

Futures and options module 324 handles the creation, submission, and acceptance of futures and options contracts by multiple participants and market makers 358 through trading system interface 354. The functions performed by futures and options module 324 include providing a form for filling orders, accepting published orders, providing a form for filling capacity offers, and accepting published capacity offers. The various orders and capacity postings are then processed by the routing module 328 to determine the best routing and available capacity for the likely given order requirements (e.g., characteristics of the goods shipped, time en route, mode of shipment, price, etc.).

Route selection module 328 also performs end-to-end routing of the order (as described in 810) to identify a particular aircraft voyage (air), tariff (truck), schedule (train), or departure (sea) to be applied to the futures or options contract. After routing, orders are sent to the adjustment market 326 using parameters specified by the shipper and/or forwarder. Once orders are routed, their routes may be broken down into component parts and grouped to create more tradable futures and options products.

Once the posting of shipping orders and capacity is processed into more tradable futures or option contracts (e.g., the consolidation of shipping components from multiple small shipping orders into futures contracts for 500 tons between two intermediate shipping points), the contracts are transmitted to trading system interface 354 for trading by market makers 358 using the appropriate option and futures trading system.

Once the contract expires, it is ungrouped by the adjustment market module 326 and the end-to-end order is reassembled. By adjusting the market module 326, portions may be adjusted by trading in an adjustment market. For example, this adjustment market trading allows forwarders to trade the 20-ton capacity of UnitedAirlines to the 20-ton capacity of Singapore Airlines, since there is a more favorable financial arrangement between forwarders and Singapore Airlines. In this manner, the adjustment market module 326 allows forwarders (and possibly carriers) to trade in accordance with contracts or contract portions having smaller capacity and shorter duration as a final adjustment before contract execution. Since these capacities are typically small, market makers are not typically involved in regulating market trading. Market module 326 also provides the opportunity for the buyer to adjust the parameters necessary for the final execution of the shipment and not present in the futures or options contract. For example, the exact model of the container, the ability to transport bulk cargo (rather than cargo already in place in the container), the exact location on the ship, special handling of delicate or dangerous cargo. These important parameters may require additional fees (or discounts) from the carrier, which may be negotiated by adjusting the market.

The reporting module 330 performs the compilation and provides different reports to shippers, carriers, forwarders, and market makers. For market makers, for example, reporting module 330 may provide data regarding how many contracts were traded, how much was gained (or lost), what futures and/or options are currently owned, and the like. At the time of settlement, the reporting module 330 cooperates with the financial module 332 to perform settlement and clearinghouse functions as well as other financial functions (e.g., checking credit values of transaction participants or deducting FFS administrative fees incurred by the transaction).

As shown in fig. 3, there is a contract and capacity management module 336 that interfaces with futures and options module 324, adjustment market module 326, and routing module 328.

Contract and capacity management module 336 may be used by forwarders and carriers to strategically locate their capacity. For example, a carrier may wish to establish rules to automatically release or reclaim capacity based on market conditions. Such rules may reclaim unsold capacity when price changes indicate that spot market prices should be higher than previously considered. In a similar fashion, forwarders may establish rules such as decisions to cover increasing forecast percentages as proximity expires when the futures price is lower than the futures price of a long-term contract.

Portfolio framework 350 is a layer of portfolio software whose task is to extract information from futures and options transactions and provide signals for operating business activities. For example, sufficient data is provided so that forwarders can book shipments and generate air drafts.

The real-time combining layer 352 allows external systems to be combined with FFS on a real-time or near real-time basis. For example, a transaction system interface 354 and an interface to other transactions 360 are connected to the FFS through the real-time composition layer 352. Interface to other transactions 360 represents an interface to external transactions to allow FFS users to prepare to access other financial transactions (e.g., other merchandise transactions). This aspect will be discussed later.

Trading system interface 354 represents an interface to an external futures and options trading system that allows market makers 358 to trade options and futures generated by futures and options module 324.

Reservation system interface 356 represents an interface to an external carrier reservation system that performs the actual reservation of capacity on aircraft, ships, trucks, and rail vehicles. These actual bookings are then performed by the carrier at contract execution time. The reservation system interface 356 interfaces with the composition framework 350 (either directly or through the real-time composition layer 352).

A back office module 320 is also shown for handling back office, system support type operations. For example, account registration management and privacy settings, privacy policy enforcement, and help desk (help desk) may represent functions performed by back office module 320.

Fig. 4A-4C illustrate how forecasts and other factors affect the capacity and price determinations of contracts made by forwarders. In fig. 4A, curves 402A and 404A show some predictions from individual shippers over a period of time for a particular end-to-end route (e.g., 5 months from Hong Kong to Reno 2004). Generally, the predictions are classified by the relevant transport parameters (e.g., bulk versus container versus liquid, allowable transit time limit, etc.). These predictions include the actual prediction data provided (402B and 404B) and bands of uncertainty or risk (bands) associated with the data (402C-402D and 404C-404D). The band of uncertainty is calculated by applying the shipper's total forecast rating and reflects the likelihood that the actual shipping capacity will fall within a given determined percentage of the band. In one example, risk may be quantified by a certainty that the actual capacity will fall into 80% of the band.

These individual predictions are then aggregated into an aggregate prediction 406. In graph 406, a prediction 407A is included, along with bands of uncertainty or risk identified by reference numerals 407B and 407C. In one embodiment, the total prediction covers the end-to-end route (e.g., HongKong to Reno). In another embodiment, the individual predictions are broken into portions, and then the total prediction is specific to the portion of the trip. For the example of the above transportation from Hong Kong to Reno, one of the total forecasts can cover the shipping needs from all electronic manufacturers between Hong Kong and San Francisco (middle point) in 5 months of 2004. In another embodiment, the aggregate forecasts (e.g., ocean shipping from all electronics manufacturers between Hong Kong and San Francisco in 5 months of 2004) can be further classified according to the mode of transportation.

From the general forecast 406, a graph 408 of FIG. 4B may be determined to allow the forwarder to determine the correct mix of long-term contracts, futures, options, and spot market purchases that will most likely achieve the shipping needs forecasted by the shipper. In graph 408, line 410a represents the shipping capacity provided by the long-term contract; line 410b represents the shipping capacity provided by the futures; line 410c represents the shipping capacity provided by the option. Lines 412a and 412b represent the upper and lower bounds, respectively, of the band of uncertainty, while line 414 represents the predicted capacity.

Long-term contracts tend to be minimally flexible. Thus, the shipping capacity satisfied by the long-term contract, represented by the area below line 410a, is almost entirely in the area of line 412 b. That is, the shipping capacity purchased under the long-term contract is almost outside the band of uncertainty (band has lower boundary 412 b). In doing so, it is likely that all of the capacity purchased by the long-term contract is provided.

Futures may be employed to meet shipping needs not provided by long-term contracts. Notably, the capacity of the carrier purchased in futures is typically lower than the predicted capacity, and it is likely that the capacity of the carrier purchased in futures contracts will be provided even if the actual capacity to be transported is lower than the predicted capacity (line 414).

Option contracts tend to be more expensive than futures contracts for a particular shipping capacity. Thus, options can be employed to meet shipping capacities that are not met by the combination of long-term contracts and futures. Referring to fig. 4, option capacity is depicted by line 410 c. Notably, the volume of shipping purchased pursuant to the option contract is slightly below the upper bound 412a of the uncertainty band, likely utilizing the volume of shipping purchased pursuant to the option contract.

Spot market purchases may be made if the forwarder needs more capacity when executing the shipping orders from the shipper. Notably, the forwarder can employ pricing data from options and/or futures contracts to predict spot market purchase prices at any given point in time. For example, forwarders may employ the well-known Black-Scholes formula to predict spot-market pricing.

Graph 430 of fig. 4C shows how the capacity demand of a given shipping order from a shipper is achieved through a mix of long-term contracts, futures contracts, option contracts, and spot market purchases using the risk management tools provided by the FFS.

In one embodiment, the forwarder's determination of the purchase price and capacity is dependent on a variety of factors. These factors include the set of forecasted data of the shipper (which may be limited by geography, time, mode of transportation, etc.), any previous futures and/or options contract purchases, existing long-term contracts, price discovery (e.g., using the Black-Scholes formula), risk of capacity forecasts attributable to the shipper, and the like. By these factors, buyers and sellers of shipping futures can determine the price and capacity set for their shipping futures and options contracts. For example, the seller may determine whether to publish more contracts and at what price-and whether it should be a market price or a limit price. The seller may determine whether to slowly release capacity over time, and how long to wait before releasing and at what price (iceberg orders). The buyer may determine that they are willing to pay the highest price for the route or whether they are merely placing a market order. The buyer can determine whether it is advantageous to over-buy and resell some contracts, and what price and at what time.

The carrier also needs accurate forecast information from the shipper to determine the shipping capacity released for the transaction over time. Since the pricing of any good is related to supply-demand, the over-supply of capacity at any point in time tends to push down the price. To achieve high pricing, carriers want to release enough capacity to meet or nearly meet the forecasted demand. Fig. 5A is a graph showing the relationship between time and capacity released as measured by the number of futures contracts sold for any particular section. At time t-0, the futures contracts for that particular portion of time are released for trading. At time t1, the futures contract expires. At this point, market makers will settle their futures contracts in cash and the futures contracts are unbundled by the adjustment market module 326 to match the futures contracts with a particular airplane number and ultimately form an end-to-end route to serve pending orders. In addition, components may be traded by a forwarder or carrier through the adjustment market module 326 to adjust any preferences. At a later time, the contract is actually executed and the goods are actually loaded onto the appropriate transport to be transported to the destination.

In graph 502, line 504 shows the forecasted demand for futures contracts as determined from capacity forecast data obtained by the shipper. Demand increases over time as the number of futures contracts sold tends to increase as the date of expiration approaches. Line 506 shows a demand curve established by the shipper for scheduling the release of futures contracts after other factors have been determined.

At any given point in time along the time axis (x-axis), the carrier considers not only the data from the shipper, but also the presence of any futures contracts that the carrier may repurchase if they are over-sold, any existing long-term contracts for capacity (which reduces demand), the risk factors assigned to shipper forecasts. Assigning risk factors by using a statistical function based on the variation between regular interval prediction and reality; implementing the assignment on a per site/consumer basis; and the aggregation is effected according to consumer level and by geography.

Another factor includes price discovery using the Black-Scholes formula. All of these factors are considered in the derivative line 506, which governs the amount of capacity released and the price set by the shipper.

Fig. 5B shows a graph similar to fig. 5A with futures prediction data shown. In fig. 5B, line 554 represents predicted demand for futures and options, and line 558 represents predicted demand for options only. Line 556 shows a demand curve established by the shipper for scheduling the release of futures contracts after other factors have been determined.

According to embodiments of the present invention, a particular form of index is created for different segments to facilitate trading and improve liquidity in the adjustment market. The index is a weighted price average (e.g., by weight) of all shipments for a particular mode (e.g., airplane, ship, train, truck) between two geographic points over a period of time. The index may be used as a parameter for pricing purposes, may be employed by market makers to trade, or may even be used as a tool for trading. The parameters may be used to reduce risk. For example, if the forwarder has a contract with the shipper for a fixed price reference of $1.5/kg, if the index is above $1.5/kg, the forwarder may purchase options to sell the index. If the index is above $1.5/kg, the forwarder's profit will be the difference between the index and $ 1.5. If the price reaches above $1.5/kg, any losses incurred in the shipper's contract will be compensated by selling a corresponding number of index contracts, thereby ensuring that the forwarder conducts a loss-free transaction.

To define an index, a geographic point may generally be a region of the world (e.g., South-eastsaia), a country (e.g., japan), a city, a specialized airport, a specialized shipping port, a city, a truck station, etc. FIG. 6 illustrates a formula for calculating an index for a particular manner between two geographic points within a time limit, in one embodiment. In fig. 6, v represents all shipments in a given way between a pair of geographic points that have passed a particular time limit T.

The example of index calculation for trucking between SF and Reno may be:

where T is the term (e.g., one week) and C is the amount of trucking capacity traded by a group of truckers during T between San Francisco and Reno.

FFS enhances liquidity in the transportation market and facilitates trading over many innovations. One of the innovations discussed previously involves breaking down an end-to-end route into parts, and combining parts from different end-to-end routes into a bundle of parts. By grouping similar routes together, capacity may be increased for each futures contract, which makes trading worthwhile for market makers. Moreover, grouping has the ability to reduce different transactional products to a smaller set (i.e., contracts for a bundle of segments) (i.e., contracts for countless end-to-end route combinations, some incorporated into remote destinations with few contracts per week). The combination of a smaller set of tradable products and a higher capacity in each product category stimulates interest to market makers.

Figure 7 conceptually illustrates how FFS facilitates and encourages trading in capacity futures according to an embodiment of the present invention. As shown in fig. 7, FFS 702 cooperates with all participants 704 in the shipping industry to create tradable futures contracts through bundling. These capacity futures and capacity options contracts are then employed by market makers 706 for trading. Which is shown in fig. 7 by reference numeral 712.

Not only does the FFS create futures and option contracts for trading, the FFS also provides information and tools (708) to allow market makers to determine pricing and risk associated with the created futures contracts. Risk assessment assigns reliability ratings to the provided information that allows market makers to more intelligently assess the trustworthiness of the data.

Pricing indices are also provided, each pricing index being specific to a particular manner between particular geographic points and over a particular time period. In addition, market makers are also provided with forecasts regarding different factors (e.g., fuel, labor, weather, road construction, haul routes, etc.) that may affect shipping capacity and pricing to assist in the futures contract assessment process. The convenience of these assessment tools is primarily to facilitate market makers trading capacity futures contracts, which increases liquidity.

In addition, the FFS provides convenient access 714 to financial markets (e.g., options and futures markets among other commodities) to allow market makers to control risks. For example, the access allows market makers to avoid the loss of adverse price movement. Suppose a market maker purchases a futures contract specifying $1.50 per ton of air shipment between Hong Kong and Alaska, starting at 9 months and 5 days 2004. Suppose that the spot market price for the leg is $1.40 per ton when the market maker needs to sell due to the reduced fuel cost. In this way, the market maker can isolate itself from the risk by buying options in the fuel market, if the fuel price drops, the market maker earns a $0.10 profit. By providing convenient access to the financial market to minimize pricing risks to market makers in connection with capacity futures trading, FFS makes trading in capacity futures more attractive to market makers, thereby encouraging trading and increasing liquidity.

Another way that FFS encourages trading is by making futures contracts available in all ways and providing independent and dependent way information and analysis tools to allow market makers to compare, analyze, and evaluate all futures contracts. For example, consider the shipment of goods between SanFrancisco and New York. For this route, the cargo may be transported by air, freight, rail, or sea. If shipping by one of the modes is affected (e.g., Panama Canal's closure, which affects shipping by sea), the capacity demand will change to the other mode and thus their pricing will change. By having futures contracts for all modes and supporting the information and tools available at their hands, the FFS properly provides a comprehensive trading environment that allows market makers to take advantage of changes in the transportation market and/or minimize the risk created by the changes.

Fig. 8A and 8B illustrate how the FutureFreight system according to an embodiment of the present invention implements a hypothetical Hong Kong-Reno multi-mode freight order for all participants to participate. Notably, not all shipping orders require market maker participation and/or adjustment of market usage. However, the order of discussion herein is helpful for understanding. Shipper forecasts 802a, 802b, 802c represent forecasts provided by shippers utilizing the Hong Kong shipping base. The prediction may be for any length of time. In this way, predictions, for example, cover 12 months and may even be provided with different levels of intervals (e.g., monthly or quarterly decomposition). The predictions are aggregated into an aggregate prediction (block 804).

The aggregate forecast data allows the forwarder to decide the amount of futures that the forwarder wants to purchase (806). Referring to FIG. 4B, line 410B shows the amount of the purchase of the installment. In this example, the amount of the shipment the forwarder wishes to purchase (block 808) is suitable for transporting 100 tons, 60m³And a service level of one day from Hong Kong to Reno during some specified period. In block 810, FutureFreight calculates all possible routes and modes and prices them using the current market price.

The calculations in block 810 for all possible routes and patterns to achieve a particular futures purchase request by a forwarder employ futures data released from, for example, air and truck carriers. In this example, air carrier (830) releases two blocks of capacity 832a and 832b for forwarder purchases as futures. For example, capacity block 832a specifies that there is an air capacity of no less than $2.00/Kg for a price of 300 tons from Hong Kong to Oakland (at the airport of northern california) on friday for the first week of 11 months in 2004. For example, capacity block 832b specifies that there is an air capacity from Hong Kong to SFO (at the airport of Northern California) of not less than $2.30/Kg for a price of 200 tons for friday on the first week of 11 months in 2004. These blocks of capacity 832a and 832b are aggregated by FutureFreight into an air futures contract for trading (block 834).

Likewise, the truckers 840 may also release their capacity (block 842) for sale to forwarders. The plurality of capacity blocks released by the plurality of truckers are aggregated into futures contracts for market maker trading (844). These multiple futures contracts are managed by the futures and options module in the FutureFreight system (block 846), which is shown by reference numeral 324 of fig. 3 in one embodiment. Although only one air and truck futures contract is shown in fig. 8A (e.g., as aggregated into blocks 834 and 844), it should be understood that the FFS can manage any number of bundled futures contracts for market maker trading. The bundled futures contracts can be bundled according to, for example, geography, location, route, mode, duration, service level, and the like.

Four possible combinations are shown in blocks 812a, 812b, 812c, and 812 d. These combinations are extracted from the futures contract bundles for transactions available to the FFS. As shown in representative block 812a, each of these combinations includes route/mode data (e.g., air from Hong Kong to Northern California, and then trucking from Northern California to Reno) and pricing data (e.g., $3.00/Kg) as well as service level data (e.g., one day). FutureFreight will then adjust the purchase and sell orders based on buyer/seller neutral and fair transaction rules within, for example, service levels and price boundaries. Examples of such trading rules include first come first served, bid-ask algorithms, and/or other neutral/fair trading rules developed for other types of futures markets. Since the buyer and seller may accept such transactions (price and service level), the route/mode combination of block 812b is selected (block 816).

Notably, the example of fig. 8 assumes that all constituent legs can be satisfied (partially or fully) using futures. In some cases, some shipping orders may involve one or more components that are not fulfilled by existing futures contracts. In this case, FutureFreight may allow these components to be implemented using a spot-purchase configuration, a long-term contract configuration, and/or other non-futures (or non-options) configurations.

In block 818, a single futures contract is used for the purchase. In this case, two different futures contracts will be purchased due to the two different routes and modes employed. The first phase contract covers the $2.50/Kg air transport portion from Hong Kong to Southern California (block 820a) and the second phase contract covers the $0.45/Kg trucking portion from Southern California to Reno (block 820 b). The result is a selection of the combination shown in block 812 b.

As mentioned, the aggregation of multiple orders for selling capacity into a larger bundle for futures trading (as implemented in block 834 for air and block 844 for trucking), increases the attractiveness of futures trading for market makers, enhances their participation, and thus improves the liquidity of futures trading. Although the aggregated futures contracts are traded as a single unit, FutureFreight makes this information available to the trader if it is desired to obtain information about the futures contract sub capacity blocks available to the trader for trading purposes (e.g., the trader can determine, by FutureFreight, that an air futures contract from Hong Kong to Northern California includes 30% shipments from Hong Kong to SFO, 20% shipments from Hong Kong to San Jose, and 50% shipments from Hong Kong to Oakland).

Market makers (850) seek to obtain trading profits by buying and selling these futures contracts until the time of contract expiration, also using FutureFreight's futures and options module (also referred to as market module price adjustment). As noted, FutureFreight also facilitates trading of index futures, allowing market makers to trade based on daily, weekly, or monthly indices (e.g., weighted or average of high and low) of futures contracts.

When the futures contracts expire, the purchased futures contracts can be broken down for trading on the adjustment (i.e., secondary) markets and final booking by the carrier. In fig. 8B, the air futures contract of block 820a (purchased by the forwarder in fig. 8A) is broken down by FutureFreight into sub-capacity blocks (block 860) that represent a subset of the actual capacity blocks provided by the air carrier (e.g., in blocks 832a and 832B). This reverses the process previously described with respect to blocks 832a, 832b, and 834. At this point, the carrier has purchased, as shown in block.

Notably, due to the commercial activity of market makers and/or other participants, air futures contract 820a now has a current market value of $ 3.00/Kg. In one case, the price is determined when the market maker settles expired contracts in cash using the futures and options module (blocks 880 and 882). In addition, the last minute and day of transactions by any trader also affects pricing. The transfer price may be the last transaction or/and an average during the last transaction, or other methods may be applied.

In this example, the three sub-carrying capacity blocks include: 862a, 862b, and 862 c. Capacity block 862a covers 33 tons of air cargo at a price of $3.00/Kg from HongKong to LAX for the five week of the first week of 11 months of 2004. Capacity block 862b covers 47 tons of air cargo at a price of $3.00/Kg from Hong Kong to San Diego for the five week of the first week of month 11, 2004. Capacity block 862c covers 20 tons of air cargo at a price of $3.00/Kg from Hong Kong to LAX starting on the first week of 11 months in 2004.

At block 864, the forwarder may view the purchased sub-capacity blocks and trade or swap unneeded sub-capacity blocks on the adjustment market (866). For example, the forwarder decides that he does not wish to reserve the purchased capacity block 862c because capacity block 862c relates to the departure for thursday, while the other capacity blocks 862a and 862b relate to the departure for friday as shown.

In the adjustment market, FutureFreight may publish the same price of capacity block 862c as the market price of the futures contract (e.g., $ 3.00/Kg). The forwarder may also specify some other price (e.g., $4.00/Kg) and hope that someone may make a spot purchase for capacity block 862 c. Due to supply and demand, the price will likely be determined by the market.

In addition, the forwarder may also need to purchase another capacity block in place of capacity block 862 c. For example, a forwarder may purchase 20T from Hong Kong to SFO on the adjustment market for the friday departure of the first week of 2004. Finally, the forwarder may end up with capacity blocks 862a and 862b, all $2.75/Kg, and a replacement 20 ton capacity block for the friday departure from Hong Kong to SFO (as shown in block 868). Of course, if the forwarder already has a replacement capacity block from his another order, the forwarder can simply perform his own exchange without resorting to a regulatory market. This manner of adjustment is likely to be used by large forwarders who tend to have very different capacity blocks adjusted internally rather than trading in the adjustment market. However, FutureFreight provides a mechanism for adjustment market trading of the final adjusted capacity blocks, if desired.

Once the forwarder is satisfied with the purchased sub-air capacity blocks, the forwarder may send data to an external booking system (blocks 870 and 872) to properly book the air capacity on the various aircraft for loading and shipping on the execution date.

Although not shown in fig. 8B, the purchased trucking futures contract may be similarly broken down into sub-trucking capacity blocks by FutureFreight, and the sub-trucking capacity blocks may be adjusted internally with other trucking capacity blocks of the forwarder or on the adjustment market. Further, once the forwarder is satisfied with the purchased sub-trucking capacity blocks, the forwarder may transmit data to an external booking system, wherein trucking capacity is booked on various trucks for loading and shipping on the date of execution. Which is shown in blocks 874 and 876 of fig. 8B.

FutureFreight may also enable market makers to participate in a number of ways to limit the risk to carriers and forwarders. Figure 9 illustrates a process by which market makers limit carrier risk in an embodiment. Using the industry's knowledge and other external market data (902), market makers may sell put options (904), which grants the carrier the right to sell capacity at a fixed price on a fixed date or within a fixed date range. These sell options may be purchased by the carrier (906). By purchasing the put options, the carrier can essentially guarantee itself to avoid undue loss since the carrier can be assured that the capacity covered by the put options is always sold to market makers that are liable to purchase at a fixed price on or within a fixed date range.

These transactions are completed by the futures and options module, as shown in 324 of fig. 3 and 9. Further, by purchasing other options (908) (e.g., those covering fuel, currency, etc.) on other public markets, the market makers may mask the risks associated with the sold put options to offset the risks associated with the sold put options. If the market maker takes care to mask his risk, the carrier benefits from selling the sell option without much risk on its own.

Fig. 9 also shows, in an embodiment, a process by which market makers limit risks to carriers. With their knowledge of the industry and other external market data (902), market makers may sell buy options (910) that grant carriers the right to purchase capacity at a fixed price on a fixed date or in a fixed date range. These call options may be purchased by the carrier (912). By purchasing the call options, the carrier can essentially guarantee itself to avoid undue losses since the carrier can be assured that the capacity covered by the call options is always available for purchase from market makers that have the obligation to sell at a fixed price in relation to the call options. Further, market makers may mask the risk associated with a sold bid option by purchasing other options (e.g., those that include fuel, currency, etc.) on other public markets to offset the risk associated with the sold bid option.

Alternatively, the market makers may perform revenue management on behalf of the carriers (e.g., airlines or rail or trucking companies or shipping companies). For example, a carrier may know in advance that they may offer 2000 tons of shipping from Hong Kong to Oakland in a year, but may not wish to deal with the process of monitoring the market and may not wish to participate in an opportunity selection/sale campaign. If the carrier releases the entire available capacity to the market at once, the price may drop, which hurts the carrier's profitability. In these cases, the market makers may use futures and options modules such as shown in 324 of fig. 3 and 9, purchasing large capacity blocks from carriers (920), and reselling capacity in smaller blocks over time in the futures or options market (922), thereby stabilizing prices and increasing carrier profitability.

Fig. 10A and 19B illustrate an order execution process for carriers and forwarders according to one embodiment of the present invention. From the shipper's forecast disseminated by FutureFreight (1002), the forwarder assesses the risk level associated with the forecast and decides the number of futures contracts to purchase (1004). Using the contract template provided by FutureFreight, the forwarder may then publish the open purchase order on the FutureFreight system (blocks 1008, 1010, and 1012). Likewise, the carrier determines the risk level associated with the forecast and the number of futures contracts to sell (1006). Using the contract template provided by FutureFreight, the forwarder may then publish the open sell order on FutureFreight (blocks 1014, 1010, and 1012).

The open sell and buy contracts can then be bundled to enhance the transaction and matched by FutureFreight using the parameters specified as the match key (1016). Different matching algorithms may be employed including, for example, first come first served for possible matches with similar parameters. Market makers also participate in the process by buying and selling (1018) futures contracts until the contract expires. The same order is applied to the different futures contracts covering the different forms required for the complete end-to-end shipment.

FIG. 11 illustrates a contract template for allowing a participant to specify a new contract for purchase or sale to FutureFright, according to one embodiment. In FIG. 11, the Required section (Required section) shows typical parameters that must be specified for a contract in one embodiment. An Optional section (Optional section) shows typical parameters that may be specified for trading in the adjustment (i.e., secondary) market.

In a necessary part, the "Action" field may include a purchase (Buy) or sale (Sell) selection. The "From" and "To" fields indicate a start point and an end point. The "Month" and "Dayof Week" fields specify the time of execution. The "Type of Order" selection may include Market (Market) or Limit (Limit). The market removes the price limit on the order. The limit requires the creator to specify a limit price to sell if the sale is not below the limit price or to sell if the purchase order is not above the limit price. Then, a qualified Price is specified in the column entitled "Price". The "Service Level" field may include, for example, Express, one day, three days, etc.

Bulk weight, also known as commercial weight, refers to the weight used in the industry to calculate shipping costs. The bulk weight may be different from the actual weight. For example, a ton of Styrofoam may weigh only one ton in actual weight, but may be considered to have a bulk weight of ten tons because Styrofoam has a very low density and may occupy a lot of space of a cargo ship. The volume weight is represented by "Dim Wt" of fig. 11. The "Price" field indicates pricing.

The order may also be made private or public as shown in FIG. 11. If made confidential, only a designated group of participants is allowed to view the order. The "Type of Trading" may include two choices, one for Futures (Futures) and one for Options (Options).

In an optional section, exemplary fields for trading air orders in the adjustment market are shown. Of course, these fields may be adapted for sea or trucking or any other means as desired. The "Airlines" field indicates the airline or Airlines of interest. The "Position" field indicates the desired loading Position on the aircraft. The "Cargo Type" field indicates the Type of goods involved (e.g., electronic devices, fragile products, etc.).

Referring now to FIG. 10A, the contract is assigned to the carrier (1022) according to first come first serve or another assignment rule based on contract expiration. The expiration date may be a day before the actual execution day (e.g., two weeks). The forwarder may use the FutureFreight adjustment market mechanism (1026) to buy (1024) or sell (1028) the sub capacity blocks (after taking them out of the purchased futures contracts). The final adjustment (1030) represents that the purchased sub capacity blocks can be booked at any time on the actual airplane/truck/rail/vessel through the futures contract mechanism (and optionally through the adjustment market).

Referring now to fig. 10B, once the final adjustment is achieved, FutureFreight sends an alert to the forwarder to begin the booking process (1050). The forwarder may also match the futures contract number to the shipment (1052). The forwarder may also generate an air freight Bill (AWB), which is an electronic document (1054) generated by the forwarder that includes the details of the shipment, including the futures contract number associated with the shipment. The AWB and futures contract number are sent to futurefreight for updating the transaction record (1056).

A list of futures/AWB matches and a list of futures contracts that are not converted to AWB are then sent via email or other electronic communication techniques (1060). A list of unmatched futures contracts is used to highlight the potential problem with the carrier, i.e., the possibility of unfilled or unpopulated shipping capacity. Subsequently, before the actual execution date, the carrier may take action to resolve the problem (e.g., address any misunderstanding by coming into contact with the forwarder or trying to sell capacity by putting it on the market).

Using AWB, the forwarder may then reserve capacity using, for example, electronic reservations (1062). The forwarder then sends a manifest to the carrier detailing the AWB/contract number of the shipment achieved, as well as the frequency and weight (1064). This data is used to create an acceptable disclosure at the carrier (1066).

Thereafter, the forwarder places the cargo into the appropriate container and delivers the cargo to the carrier (1068). At shipment, the carrier loads the cargo and transports (1070) the cargo to the final destination (1072).

During the financial reconciliation process, the forwarder employs the AWB, which is included in the forwarder's shipment (1074) to bill the forwarder (1076). The forwarder pays a bill (1078).

Since orders may be traded several times before execution, there may be third parties that need to pay/receive money, but are not mentioned in the final air and/or shipping manifest. Examples include traders participating in a particular contract that is traded multiple times before the contract is executed. In blocks 1080, 1082, and 1084, the participants are billed and/or paid. At this stage, FutureFreight may also collect fees due to the services provided by FutureFreight.

In one embodiment, FutureFreight receives a transaction fee for each matching transaction. Fees are extracted from the settlement amount between the buyer and the seller. In one embodiment, FutureFreight adds the transaction fee to the maximum price imposed by the seller. The buyer sees the seller's price including the transaction fee. When the buyer pays the seller, money is transferred through a clearinghouse (Clearing House). The clearinghouse then obtains the fee from the currency paid by the buyer and passes the fee on to FutureFreight. Other delegation-based configurations may also exist.

Fig. 12A illustrates a control panel as seen by a forwarder when trading futures, according to one embodiment. In block 1202 ("Market" or "Market View"), public (i.e., unmatched or unfilled) futures contract offers submitted by forwarders, carriers, and/or Market makers are shown. Each of these open futures contract offers includes, for example, the origin and destination ports, the month of performance, the service level, the bid and ask prices, and the weight of the shipment.

In block 1204 ("My Orders"), unfilled futures contract offers for the particular forwarder are shown. Each unfilled futures contract offer includes, for example, the origin and destination ports, the month of execution, the service level, the type of order, the limit price, and the weight.

In block 1206 ("My submissions"), the futures contracts that have been matched by FutureFreight for that particular forwarder are shown. Each matching futures contract includes, for example, the origin and destination ports, the month of performance, the service level, the price of the purchase futures contract and the current price, the amount of profit, the percentage of shipper forecasts represented by the matching futures contract, the weight, and the action (e.g., buy/sell).

In block 1208 ("Forecast"), the predictions from shippers who cooperate with the particular forwarder are shown. Each forecast may include, for example, the origin and destination ports, the identity of the shipper making the forecast, the month of performance, the type of goods, the volume of the forecasted shipment, the actual weight, the transaction weight, and the grade of the forecast quality. The forecast ratings may be based on personal judgment of the FFS operator, based on self-assessment of the shipper submitting the forecast ("Conf" denotes confidence), and/or based on historical data including past comparisons between forecasted shipments and actual shipments ("Qual" denotes qualitative assessment). These levels are discussed below in relation to FIG. 13.

Fig. 12B illustrates a control panel that may be seen by a carrier when trading futures, according to one embodiment. In one embodiment, the carrier is not provided with forecast data relating to a specific shipper. Thus, in the "Forecast" panel of the example of fig. 12B, the predictions and prediction levels are related to the overall prediction, and not to the specific predictions of the specific shipper (as is the case with the forwarder control panel of fig. 12A).

FIG. 12C illustrates a control panel that may be seen by a carrier when transacting rights according to one embodiment. Thus, additional options related parameters (e.g., contract price ("Strike") or entitlement ("Prem")) are also shown.

Once the futures contract expires, the participant's commitment may move to an Adjustment Control Panel (Adjustment Control Panel) to facilitate the Adjustment. In general, FutureFreight may assume that a participant (e.g., a forwarder) may accept a component unless the forwarder specifies a desired adjustment or trade with respect to the component. In FIG. 12C, the "Commitment" section shows the components for subscription. Any of these components may be moved to the adjustment control panel portion of fig. 12C to initiate adjustment or trading (e.g., on the spot market). Market observations of the adjustment (e.g., spot) Market are shown under the "Market" section of fig. 12C. With the adjustment control section of fig. 12C, if the components obtained through the futures mechanism do not fully satisfy the participant's preferences, the participant (such as a forwarder) may purchase/sell/trade individual components to adjust any preferences.

It is noted that if an end-to-end order involves multiple components applying a single or multiple means (e.g., marine, air, rail, truck), adjustment of any one component may require adjustment of another component. FutureFreight may allocate a connection (applying, for example, a system-generated tag associated with an internally-generated identifier that identifies a component) that is either weak or strong between any two components of an end-to-end order. If the connection is weak, FutureFreight alerts the participant whether an adjustment of one or more components may result in a mismatch with one or more other components as compared to the adjustment according to a period of time (e.g., an adjustment of an air-borne component may cause a shipment to miss the time of the truck-haul departure) or location (e.g., an adjustment of a railroad component may require the configuration of additional haul-off devices to complete the current truck-haul component) or based on a violation of any prescribed condition (e.g., the shipment requires a specialized offloading or storage mechanism, and the suggested adjustment results in a shipment to a particular port that does not have the required offloading or storage mechanism). If the connection is strong, FutureFreight may enforce additional adjustments to account for mismatches or to remove disruptions to certain conditions. The specifications of strong or weak connections and of any particular conditions related to the shipment or transport mechanism may be pre-programmed in the FutureFreight database and/or specified by the participant.

In general, shippers want to provide accurate forecasts because accurate forecasts cause forwarders to purchase more capacity using low cost mechanisms (e.g., futures) rather than forcing forwarders to limit (hedge) risks using higher cost mechanisms (e.g., spot market purchases). Here, the inventors have developed an elegant and novel quality measure for a shipper to specify a Shipper's Credibility (SCL) with which a participant can evaluate a forecast of a shipper's shipping needs.

Fig. 13 shows a tool for allowing a shipper to specify an SCL, according to one embodiment. The various factors that comprise the SCL are shown in fig. 14. These factors include, for example, demand, manufacturing preparation, manufacturing site, capacity, product, lane, and lane stability. In addition, each of these factors is given a weight (e.g., manufacturing readiness is 25% of the total value, wherein route stability is only 5%). By adjusting the sliders (e.g., 1302a-1302g) associated with each SCL factor, the shipper can enter his confidence level into his forecast based on a clear criteria. Assuming 100% of shippers believe each factor, the maximum confidence is 100%.

Using the tool of FIG. 13, the shipper may indicate his subjective assessment of each of these factors with a sliding range. For example, consumer demand for a shipped product between low certainty and high certainty may be indicated by a shipper. Manufacturing readiness may vary between being unprepared and fully ready based on the availability of materials provided, the internal resource readiness for building the product or part, and/or any plan required to build the product or part. The manufacturing site may vary between a new site (greater risk) and an already established site (lesser risk). The capacity may vary between 100kg (less risk) and 10 tons (higher risk). The maturity of a product can vary from a new product (greater risk) to a product over 6 months (more mature). The route factor estimates the number of months of a particular traffic route that has been used for transportation. The ranking may vary between a new route (high risk) to an established route (low risk). Route stability estimates the stability of the route for transportation. Route stability can vary from high risk to high stability. Once the shipper has specified values for these SCL factors via the slider, the estimated SCL (shown as 39% in fig. 13) may be estimated.

In addition to the desired SCL, FutureFreight also generates a Forecast Quality Index (FQI) to help participants evaluate forecasts from shippers (and help evaluate capacity forecasts from carriers). FQI provides a quality measure of the forecast quality and is a statistical function based on the variance between the forecast data and the actual shipment data. The FQI is derived by mining historical records relating to forecasts from shippers and actual shipping data. FQIs may be performed based on location/customer (e.g., at XYZ plant in Singapore) or aggregated based on customer level/geography (e.g., all XYZ facilities in Southeast Asia).

Figure 15 illustrates how FFS calculates estimates of the quality and quantity of shipper forecasts according to one embodiment of the present invention. The process begins with a forecast provided by, for example, a shipper's ERP (Enterprise resource planning) software (1502). The forecast is converted to a capacity and/or deadline for the route (1504), and the Shipper may indicate an accurate forecast (e.g., using the tools and techniques previously described in connection with fig. 13 and 14) for its own quality assessment (Shipper Confidence Level in 1506).

To calculate the prediction quality index, the FFS first extracts past prediction data from a past prediction data store (1506). The actual historical shipping capacity may also be extracted 1508 from a data warehouse of historical shipping capacities or from the shipper's ERP software. The historical forecast data and actual shipment data may then be sorted by geography or by another sorting criteria to facilitate the comparison. In block 1512, the historical forecast data is compared to actual shipment data (1512). An FQI (for geography in the example of fig. 15) is generated (1514), published by FutureFreight together with SCL and forecasts by the shipper. Of course, if desired, the FFS may also use additional criteria to classify historical forecast data and actual shipment data to provide participants with different methods to assess the quality of the forecast. The predictions, FQI, and/or SCL are then published 1516 to the participants using the appropriate FFS user interface.

In one embodiment, all traders (i.e., any participant involved in the purchase and sale of futures or options) are provided with aggregate forecast data and forecast ratings that do not identify a particular trader. In addition, a freight industry index that does not specifically identify a particular participant is also provided to all traders via FutureFreight. This allows traders to accurately evaluate the purchase/sale of futures, thereby increasing the confidence in futures trading and increasing participation in the futures market, which improves liquidity.

On the other hand, due to commercial competition, shippers, forwarders, and carriers have strong requirements that prevent potential competitors and/or the trade news community from getting specific data. The inventors herein have also recognized that some participants may cheat as different roles (e.g., shipper posture as a forwarder or market maker) in hopes of obtaining competitive information about his competitors. Thus, there is a challenge to create a system that can provide information to encourage fair and efficient fulfillment of shipping orders (including traders' trading) while at the same time maintaining the competitive interests of the participants.

In one embodiment, each participant is certified and/or contractually obligated to prevent the participant from misusing the information obtained from FutureFreight to the detriment of the other participants. Authentication may include registration and password protection. Verification based on participant identity may also result in access to only one or a restriction specifying multiple application windows (e.g., Forecast, My Orders, My Commission, or Market View). Authentication may also limit functional authentication for purchase/sell/cancel orders based on participant identity.

In one embodiment, the default data security options may specify that the Summary Screen and Market view are visible to all users, while My Orders and mycommenting are visible only to the participants who begin those Orders. However, as described below, these default data security options may be modified, which may be considered additional or alternative to the default data security options.

One strength of FutureFreight (strength) is a rich set of data security options that allow participants to design who can receive which particular set of data. Thus, in addition to the default data security option, there are data security options that may be specified by the participant. These participant-specified data security options may supplement or replace the default data security options. Thus, for example, even if FutureFreight provides certain information to a certain participant or group of participants according to a default data security option, any participant may define information about itself, and such participant-specified data security options would override the system default data security options.

For example, in one embodiment, a participant (e.g., a shipper) may choose to limit certain information (e.g., shipments or forecast data for the shipper) to a particular group of recipients (e.g., a particular group of forwarders). As another example, the shipper may further restrict the forwarder's access to shipment and/or forecast data. Instead of allowing a particular forwarder access to data regarding all shipment routes, a shipper may restrict the forwarder access to information regarding, for example, only one or more particular shipment routes, one or more particular locations, and/or one or more terms.

Shippers, who may be manufacturers, naturally have a strong requirement to keep their shipping data secret, since such data can be utilized by competitors to the detriment of if such data is disclosed prematurely. Thus, in one embodiment, the shipper does not access any data (unless they are registered traders, such as forwarders). Alternatively or additionally, in one embodiment, the shipper only sees his own predicted level. Alternatively or additionally, in one embodiment, the shipper may only see shipping indexes with average prices. Alternatively or additionally, in one embodiment, the shipper may also be prevented from viewing the aggregate forecast data (e.g., based on geography) to prevent the shipper from being able to infer information about his competitors, which may be shippers from/to the same location. Alternatively or additionally, in one embodiment, the shipper is not authorized to view individual orders (buy/sell) and/or market opinions (observations of the futures trading market, including data related to trades in futures contracts) from forwarders, carriers, and market makers, unless needed. This prevents the shipper from improperly obtaining data (e.g., forwarder's cost data).

In general, the forwarder may be allowed access to the shipper's total forecast (e.g., based on geography and/or time). To secure the additional data, the forwarder may not be provided with information identifying the particular shipment order or the prediction of the particular shipper unless the forwarder is specifically approved to receive such information from the shipper. Alternatively or additionally, the forwarder may not access the capacity release order of the carrier unless the carrier specifically authorizes access to this information. Forwarders are typically allowed to view market observations and freight indices.

Carriers are generally not allowed to access individual forecast data for a particular shipper unless specifically authorized. Generally, the carrier may view the total forecast data (e.g., by geography) and the total forecast ratings. The carrier may also access market observations and freight indices.

The market makers only access the data necessary to evaluate and execute the trades in the bundled futures contracts. Thus, market makers are generally not required to access forecast data about a particular shipper. As another example, a market maker may not be allowed to view individual orders from a particular forwarder or a particular carrier. Generally, the carrier may view the total forecast data (e.g., by geography) and the total forecast ratings. The carrier may also access market observations and freight indices.

While this invention has been described in terms of several preferred embodiments, there are alterations, permutations, and equivalents, which fall within the scope of this invention. For example, given the disclosure, one skilled in the art can apply various techniques that have been disclosed using futures to options and/or combinations of futures and options to facilitate discussion. Thus, embodiments of the present invention are applied to derivative contracts including futures contracts and/or options contracts. It is noted that there are many alternative ways of implementing the methods and apparatuses of the present invention. It is therefore intended that the following appended claims be interpreted as including all such alterations, permutations, and equivalents as fall within the true scope of the present invention.

Claims (18)

1. A network-based, computer-implemented method for implementing multiple forms of freight transportation involving at least two modes of transportation between a first location and a second location, the method comprising:

receiving a derivative purchase request for capacity between the first location and the second location, the derivative purchase request having contractual requirements specifying at least shipping capacity and execution time;

determining from a database of available derivative contracts a plurality of potentially applicable derivative contracts that meet the contract requirements; and

selecting a subset of the plurality of potentially applicable derivative contracts to satisfy the derivative purchase request, the subset including at least a first derivative contract for a first mode of the two modes of transportation and a second derivative contract for a second mode of the two modes of transportation.

2. The method of claim 1, wherein the plurality of derivative contracts represent all derivative contracts in the database that meet the contract requirements.

3. The method of claim 1, wherein the subset is selected using fair and neutral business rules.

4. The method of claim 1, further comprising:

receiving data regarding capacity releases from shippers, each of said capacity releases specifying a shipping capacity and a start point and an end point, each of said capacity releases further specifying performance details including one of a departure time, a transit time, and an arrival time;

bundling selected ones of said capacity releases into said available derivative contracts, wherein at least one of said available derivative contracts includes a plurality of said capacity releases.

5. The method of claim 4, wherein the bundling comprises grouping capacity releases related to geographically closest start and end points.

6. The method of claim 5, wherein the bundling further comprises grouping capacity releases that fall within a predetermined time window.

7. The method of claim 4, wherein the bundling comprises grouping capacity releases that fall within a predetermined time window.

8. The method of claim 4, further comprising:

a moderating market mechanism is provided for allowing buyers of said capacity between said first location and said second location to trade particular components of said subset of said plurality of potentially applicable derivative contracts with other participants in the shipping industry in accordance with said subset of said plurality of potentially applicable derivative contracts.

9. The method of claim 1, further comprising:

receiving a shipment forecast for a potential futures shipment and a self-assessed quality level associated with the shipment forecast;

aggregating the shipment forecasts and quality grades into an aggregate shipment forecast and aggregate quality grade; and

providing the total shipment forecast and the total quality rating to the trader, the trader representing one of a market maker, a forwarder, and a carrier, enabling the trader to estimate a capacity of the derived contract to be purchased.

10. The method of claim 9, wherein a self-assessed qualitative rating of the plurality of self-assessed quality ratings relates to a self-assessment by a shipper of at least four criteria of a set of criteria including demand, manufacturing readiness, manufacturing location, capacity, product, lane, and lane stability.

11. The method of claim 9, wherein one of the self-assessed quality levels relates to a shipper's self-assessment of a set of criteria including demand, manufacturing readiness, manufacturing location, capacity, product, lane, and lane stability.

12. The method of claim 9, further comprising:

calculating a quality level for the shipment forecast, the quality level based at least on historical data for past shipment forecasts and past actual shipment volumes;

aggregating the quality grades into an overall quality grade; and

providing the total quality rating to the trader.

13. The method of claim 1, wherein the first mode represents one of an air transport mode, a sea transport mode, a rail transport mode, and a trucking mode, and the second mode represents a different one of the air transport mode, the sea transport mode, the rail transport mode, and the trucking mode.

14. The method of claim 1, further comprising providing a derivative contract trading mechanism to enable market makers to electronically trade the first derivative contract and the second derivative contract prior to expiration.

15. The method of claim 1, further comprising providing data regarding the first derivative contract and the second derivative contract to an electronic booking system in dependence upon an execution time of the first derivative contract to book capacity for shipment using the first mode and the second mode, respectively.

16. The method of claim 1, further comprising:

calculating a freight index based on historical freight volume between the first location and the second location; and

providing the total shipment forecast and the total quality rating to a trader that represents one of a market maker, a forwarder, and a carrier.

17. The method of claim 1, wherein the derivative purchase request represents a futures purchase request.

18. The method of claim 1, wherein the derivative purchase request represents an option purchase request.