TAC Index: Indexing with a touch of Ingenuity

John Peyton Burnett, Managing Director

Though indexing of the air cargo market isn’t a new idea by any means, driving value for multiple stakeholders within the value chain requires a touch of ingenuity that differentiates air cargo intelligence providers from one another. This is the ultimate prize that solution providers strive for – offering clients actionable insights that empower them to make intelligent decisions in the air cargo marketplace. In such a competitive sector, experience and market understanding, along with a bit of precise timing, play a crucial role in deducing intelligent analytics through indexing. TAC Index’s entry into the air cargo marketplace resembles such ingenuity – one that involves a new indexing methodology based on the steel index.

To elaborate, John Peyton Burnett—managing director of TAC Index—details two critical aspects that make their solution unique in the marketplace and offer subscribers business-critical insights for better decision-making capabilities. “Indexation of the air cargo market was attempted by a number of parties previously. You had Reuters try in the 1990s, GFX in the 2000s, and then we began the TAC Index effort in 2010. We were fortunate enough to learn from the mistakes of the past, build upon technical innovations in IT centralization with the forwarders in the 2010s,” begins Burnett. “We essentially offer a new method for generating indices based on current transactional data instead of declaratory data which, to this day, is the gold standard for generating financially compliant and truly useful (for business parties) indices. These indices help with risk management for all parties, including the potential to have floating rate contracts going forward (based on our Indices) as well as ultimately physical hedges against price volatility.”

As a forwarder-centric publisher, TAC Index is developed based on historical transactional data obtained from forwarders (7 days of historical data, Day 1 (MON) through to Day 7 (SUN), where the company aggregates the information within 12 hours and publishes it on its website around 2 PM GMT every Monday.

The basic indices initially launched are now also being increasingly supplemented by airline data for quality control purposes. TAC Index utilizes transaction information despite the herculean effort it takes to aggregate and construct such a data set, as it is nearly impossible to tamper with or manipulate. The company has formulated different equations and methodologies, along with a number of generic formulae that can be used by the entire marketplace, which is the Actual Net Price (ANP) rate. By tracking the major trade lanes on a week-by-week basis, TAC Index determines the volatility within the marketplace; this business-critical information can then be applied to solve various problems for shippers, forwarders and the like.

Having established the business in 2011, Burnett and the team have published its data sets since 2016, with its earliest data set going back to January 2015. Last year, TAC Index agreed with the Baltic Exchange to jointly publish the Baltic Airfreight Indices. The Baltic Exchange is the Benchmark Administrator whose indices are audited by PwC, with TAC Index serving as the calculating agent. Adding a firm layer of financial regulatory compliance to the published data sets, the Baltic Exchange can publish datasets as benchmark administrators with fully regulated indices, which the financial marketplace can use for various purposes, even as a hedging instrument.

TAC Index publishes air cargo indices to help clients make intelligent decisions based on actionable insights.

These data sets have established a pivotal reference standard, particularly in the post-pandemic era where supply chain and logistics disruptions have caused grave irregularities. “No one knows what is happening on the marketplace, and we are the only ones supplying this kind of pricing data,” adds Burnett. Likewise, TAC Index is also in the process of launching an enhanced product suite including TAC Energy which tracks Fuel Surcharges and TAC Space which track theoretical capacity. In its collaboration with shippers and for illustrative purposes, TAC Index helped a client mitigate airfreight costs of $1.5 million, with similar benefits observed across the clientele. The data sets offered by TAC Index are also representative of 30+ global forwarded trading positions, offering subscribers powerful insights to optimize supply chain and logistics workflows.

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Company
TAC Index

Headquarters
Hong Kong

Management
John Peyton Burnett, Managing Director

Description
TAC Index publishes air cargo indices to help clients make intelligent decisions based on actionable insights. As a forwarders-centric publisher, TAC Index is developed based on historical transactional data obtained from the forwards (7 days of data), where the company aggregates the information within 12 hours and publishes it on its website around 2 PM GMT every Monday. TAC Index utilises transaction information despite the herculean effort it takes to aggregate and construct such a data set, as it is nearly impossible to tamper or manipulate