How the Program Works

 

How To:
1. Identify how many gallons per month your fleet consumes.
2. Select how many months you want to protect your fuel spend from higher prices.
3. Execute the swap agreement and submit your premium payment.

How it Works:
 

K-Ratio provides an opportunity for participants to protect its fuel spend from higher expenses
incurred by rising fuel costs. With our one-directional hedge program, our clients can lock-in
historically low diesel prices with the flexibility to benefit from even lower prices should prices
decline further, all for a monthly cost less than the price of one refill at the pump.

 

K-Ratio is an NFA member firm and CFTC-registered CTA, IB, and Swap Firm. With decades of
professional experience in futures hedging, fund management, investment banking, data science,
and logistics, our team of experts was built specifically for the needs of managing risk inside of the
trucking industry. As an expert in the recently launched Trucking Freight Futures market and award
winner of FreightWaves’ 2019 Best In Show for our Freight Intelligence platform, K-Ratio is the go-to
leader for industry expertise in maximizing revenue while decreasing expenses. Our latest product
offering is the Diesel Fuel Program, a distinctive and unparalleled contribution that allows its users
to benefit from both higher and low fuel prices.

 

Traditional hedging confines the end-user to specific gallon sizes and fixes the price regardless of
market movement. K-Ratio’s Fuel Hedge Program allows you to customize your size to any amount
of gallons on a monthly basis and, most importantly, provides protection against rising prices while
not anchoring you to a fixed price, should prices decrease. Our program does not replace any fuel
savings cards or benefit subscriptions, actually, it works better alongside such programs. As a purely
financial instrument, you are free to select any fuel stations and there is no requirement for receipts
or invoices. No diesel will ever be delivered to your business and you may refill your tanks at any
location you choose.

 

K-Ratio’s Fuel Hedge Program is structured around the global benchmark for diesel pricing,
agreements, and contracts: the New York Mercantile Exchange Ultra-Low Sulfur Diesel future. Prices
at the pump, regardless of location or merchant, are composed of this benchmark price plus
applicable taxes, fees, and profit margin for the merchant. In hedging parlance, this is known as
basis. This basis is consistent regardless of geography. If the benchmark price moves up or down,
prices at the pump will move up or down in a corresponding manner. This is what allows K-Ratio
Fuel Hedge Program participants the flexibility to fuel up anywhere at any time, and still benefit
from price protection in an increasingly difficult business environment. The mechanics of the
transaction are simple: 1) Program participants are given a start price upon enrolling, which is the
current benchmark market price, 2) participants determine which months they would like to hedge
and amount of gallons for each, 3) participants pay premium in to lock in price. Monthly settlement
dates are provided at the programs onset, so participants know when to expect monthly settlement.
Upon reaching the monthly settlement date, if market prices are higher than your start price, K-

Ratio issues payment to you for the difference in the increased market price versus your start price
multiplied by the number of gallons you chose to protect at the start of the program. If market
prices are lower than the start price at the settlement date, there is no cost to you other than the
original premium, and you enjoy the benefit of paying less at the pump with no financial obligation
to K-Ratio.

 

We make it easy; simply select your amount of gallons to protect, submit payment for the program
fee, and rest assured knowing your fuel spend ceiling is safeguarded.

FAQs

 

1. How is the program’s fee determined?
A. The program fee is derived from the number of gallons protected, current market
prices, transaction costs, and the duration of coverage.

2. Where can I see the market price?
A. As a publicly traded product, NYMEX ULSD can be found on several websites for free,
particularly at https://www.cmegroup.com/trading/energy/refined-products/heating-
oil_quotes_globex.html
or on our website, https://k-ratio.com

3. Where can I see my program protection?
A. Simply login to your account at k-ratio.com where you can view your level of protection,
settlement dates, and market prices.

 

4. Can I pay the program fee monthly?
A. Unfortunately, in order to provide protection for the entire term length, we require
payment in advance for duration of coverage. Market conditions change daily, which is
why we need full payment to lock in future fuel prices. The premium is used to directly
cover your risk of higher fuel costs in the market.

5. What if I need to hedge more gallons or don’t require as much as previously needed?
A. You can add more gallons to protect at any time, and coverage begins as soon as
payment is received. Reducing the protection amount cannot be done, however, as K-
Ratio immediately initiates coverage once your individual program begins. Since our
program is financial in nature with no physical aspects of diesel fuel involved, purchasing
coverage for gallons unused will only result in a premium fee slightly above need, but
you will still retain the benefit on the gallons unused should prices increase through
your monthly settlement.

 

6. If prices move higher, how do I receive payment?
A. Within seven business days of each settlement date, K-Ratio issues payment via check or
ACH at your request.

 

7. How can I be assured K-Ratio will issue payment?
A. K-Ratio is not an insurance company, so there is no possibility of default. We do not hold
your risk either, we simply transfer the risk from your company into the marketplace
through futures, options, and swap agreements, and the subsequent positions are what
enable payment to the program user. All swap agreements are thoroughly binding
contracts, which obligate K-Ratio to issue payment per the conditions of the agreement.

In addition, K-Ratio and all of its principals and employees hold all necessary licensing,
credentials, and proficiencies, and maintain perfect records of good standing with zero
regulatory enforcements, actions, or decisions.

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Address: 4809 N Ravenswood | Chicago, Illinois 60640
Phone Number: 312.736.2600
Email: info@k-ratio.com

Copyright ©  K-Ratio

Information included in this website, including research reports or explanatory/background studies or papers, as well as RSS content feeds, is provided for informational purposes only and has been obtained from sources K-Ratio Advisory, LLC (K-Ratio) believes are reliable; however, K-Ratio makes no representation or warranty regarding the accuracy or reliability of such information or the suitability or appropriateness of such information for any person.The risk of loss in trading or hedging through commodity futures or options can be substantial. You should therefore carefully consider whether such trading or hedging is suitable for you in light of your financial condition. The high degree of leverage that is often obtainable in commodity futures or options can work against you as well as for you. The use of leverage can lead to large losses as well as gains.Managed futures or options should only be considered after careful review of all material factors, including but not limited to disclosures regarding risks, fees and charges and liquidity. Managed futures or options accounts are subject to charges for management and advisory fees. It may be necessary for such accounts to produce substantial trading profits to avoid depletion or exhaustion of assets.This brief statement cannot identify all of the risks and other material aspects of the futures markets. Neither CFTC nor NFA has passed upon the merits of participating in any program offered by K-Ratio or on the adequacy or accuracy of information contained in this website.PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE POTENTIAL FOR PROFIT IS ACCOMPANIED BY THE RISK OF LOSS.