The MerQube FreightWaves Supply Chain Tech Index — the first index to track the performance of the supply chain and logistics industry — was launched Tuesday. Companies on the index have a minimum float market cap of $500 million and a minimum average daily value traded of $3 million.
The following sectors are considered for inclusion in the index: tech-enabled third-party logistics (3PL); logistics software; e-commerce logistics; alternative energy/autonomous technology; and asset-heavy technology investments.
The index developed by MerQube and FreightWaves includes an index of publicly traded companies based on stock price (MQFWSCTP). There will be a second index as well, based on total return (MQFWSCTT). The stock price index measures only the nominal value of a stock, whereas the total return index will include dividends as part of the valuation. The indices are calculated daily.
There is a two-tier market cap weighting used. “Pure play” stocks are assigned an 80% aggregate weight in the indices, with individual stocks capped at 10%. “Non-pure play” stocks are assigned a 20% aggregate weight in the indices with individual stocks capped at 5%. The indices will be rebalanced and reconstituted semi-annually, allowing the addition of newly listed companies.
(Photo: FreightWaves)
Forty percent of the global economy is tied to logistics dependent industries and the companies chosen to be a part of the MerQube FreightWaves Supply Chain index are representative of the firms that are innovating how goods are transported, stored, and managed across the global supply chain.
“There are currently no similar indices available in the market,” said Craig Fuller, founder and CEO of FreightWaves. “The Supply Chain Tech Index will include large and liquid global stocks identified by FreightWaves as best in class in delivering freight technology solutions.”
Pandemic caused seismic shocks to supply chains
During the coronavirus pandemic, the public became acutely aware of the importance — and fragility — of supply chain networks on the global economy.
“Shipping bottlenecks and shortages of everything from semiconductors to chicken wings are drawing more attention to technology aimed at streamlining supply chains and boosting efficiency in distribution networks,” wrote Jennifer Smith in The Wall Street Journal.
The shocks on supply chains are still a reality, and investments in supply chain technology have increased dramatically. In 2020, investment in supply chain technology reached $52 billion, up from $34 billion in 2018 and $32 billion in 2019. Moreover, in 2021, $24.3 billion was invested specifically in supply chain technology startups — 58% more than in 2020.
Also, the performance of supply chain stocks has been very strong over the past five years, easily outpacing the market and the transportation industry as a whole.
Technological disruption has accelerated due to the pandemic and its aftermath. “Digital transformation will be fundamental as we tune into a post-pandemic supply chain,” wrote Karen Kroll in an Inbound Logistics article.
(Photo: MerQube)
The MerQube FreightWaves Supply Chain Tech Index provides market participants the ability to monitor companies operating in this space, as well as take exposure through investment products linked to the index.
MerQube Chief Commercial Officer Roby Muntoni said, “The general purpose of any stock index is to measure investment sentiment in a specific sector. Businesses involved in supply chain management activity can use the MerQube FreightWaves Supply Chain Tech Index to gauge investment interest in their sector — and also to benchmark their performance versus the financial markets.” Muntoni continued, “While investors of all kinds may be interested in the index, we believe that financial institutions, investment firms, transportation, supply chain and logistics companies and the media will be most interested.”
The global freight market and the companies behind the index
At least $9.6 trillion is spent annually to move freight around the globe, and FreightWaves is the most trusted provider of global supply chain market intelligence. SONAR, FreightWaves’ content-supported SaaS offering, provides high-frequency price, demand, and capacity data and analysis to FreightWaves customers. With SONAR, they are able to benchmark, analyze, monitor and forecast the global physical economy.
MerQube is an innovative technology provider offering design and calculation solutions for rules-based investment strategies and passive solutions. Launched in 2019 by a team of index industry veterans and technology experts, MerQube calculates a wide variety of strategies, ranging from defined outcome to volatility and risk control, from end-of-day to real-time calculations.
For more information about the MerQube FreightWaves Supply Chain Tech Index, please contact sales@merqube.com.
