LETTERS TO THE EDITOR

LETTERS TO THE EDITOR

Why not futures for cargo volumes?

Bill Mongelluzzo's mention of the "brightest minds" in the business being unable to accurately predict this year's containerized freight flows (cover story, Sept. 6) reminded me of the 1998 demise of Long-Term Capital Management. In that case, some of the best mathematical minds on the planet watched their hedge fund crash and burn - not because they weren't brilliant, but because, as the old saying goes, they didn't know what they didn't know. So, too, it seems, with freight forecasting.

With that in mind, perhaps the trade might wish to take a page from the Iowa Electronic Market (http://www.biz.uiowa.edu/iem/), the University of Iowa's self-described "real-money futures markets" in which contract payoffs depend on economic and political events such as elections or, more recently, Google's post-IPO capitalization. The IEM provides a means of bringing together dispersed knowledge from a range of participants - all with their own individual insights and opinions - and embodies this knowledge in cold, hard numbers. The whole idea of futures markets being used to predict non-market outcomes may seem odd, but the IEM has called the last several elections better than Gallup.

Perhaps The Journal of Commerce - maybe in conjunction with the IEM - could sponsor a "freight throughput futures" for specific trade lanes, and even specific ports and post daily trading results on the JoC Web site. If you were able to elicit widespread U.S. and international participation, the figures that would emerge from this futures market might embody some of the knowledge that has seemed to elude the best and brightest of freight forecasters this year.

Edward Feege

McMunn Associates Inc.

Severna Park, Md.