Spot Freight Market Alongside Contract Freight Market Insight Inside Your TMS

Spot freight and contract freight markets offer truckload capacity.

Even in the best of times, freight hauling contracts are a diverse and varied aspect of freight transportation and management. Today, spot freight and contract freight arrangements are the most common between shippers and carriers.

Contract freight is usually the bulk of a shipper’s arrangements, made up of annual contracts. On the other hand, the spot market is any one-off, oddball, or surge volume load arranged under short-term agreements.

As spot freight and contract rate indexes are climbing, increasing as much as 4% year over year reports Transport Topics, freight contracts persist as a cornerstone of capacity management and procurement. The rates and terms specified in spot and annual contracts set the standards for shipping services, rates, and fees. These agreements can significantly impact bottom line profits or losses.

The Challenges of Managing Spot Freight Versus Contract Freight Sourcing

There is a dominating reason why spot freight and contract freight are so vital to the modern shipper’s overall success and growth. Simply put: diversity matters in freight procurement.
Today no successful shipper runs all their freight with the same rate and contract terms. Successfully mitigating freight access and capacity management challenges requires a strategic blend of contract and spot arrangements.

The difficulties of communication, rate variability, market volatility, and shifting consumer demands make it challenging to manage freight matching without the right setup and tools in place.

Using a TMS Creates Insight Into Freight Hauling Contract Rates

Shippers who can monitor both contract and spot market freight rates have an easier time maintaining visibility within multiple shipping lanes and modes.
Utilizing a TMS platform and technology tools allow shippers to easily manage freight hauling contracts and monitor rates. Insight is vital to ongoing success because the balance between spot freight and contract freight arrangements constantly fluctuates.
It ultimately depends on what the market looks like at any given moment and what trends are driving the market. Sometimes the spot rate is higher; other times contract rates are higher.

The truckload market is cyclic and constantly changing, which is why an advanced TMS system helps supply chain management dial in on current cycles and trends that directly impact pricing and freight hauling rates.

Additional Benefits of Working With a TMS to Manage Both Spot and Contract Freight

Balancing rates and arrangements with customers and navigating between spot freight and contract freight contracts can be a complicated process. Utilizing a TMS setup to manage freight hauling contracts can benefit shippers in many ways, including the following:
  • Better Capacity Management – faster collaboration and management of critical tasks.
  • Access to Reliable Rates – access to real-time freight rates helps keep costs lower.
  • Faster Response to Availability – capitalize on bids and offers before they disappear.
  • More Streamlined Management – efficiency increases throughout the entire network.
  • Improved Response to Disruptions – practical responses when problems arise in shipping.
  • More Reliable Communications – have access to team members anytime, anywhere.
  • Automated Tracking and Monitoring – real-time notifications and ETA updates.
  • On-Demand Status Reporting – gain customer-focused responses to status reports.
  • Fewer Claims and Complaints – better visibility lowers risks for freight claims and fees.
  • Greater Flexibility in Volatile Markets – the ability to quickly scale and shift focus.
  • Enhanced Response to Customer Needs – optimized and personalized customer service.
  • Increased Profits and Lower Expenses – better predictive planning across the network.
  • Overall Improved Business Processes – better day-to-day operations within the company.
Shippers need to pay close attention to the inner workings of freight hauling contracts, especially in today’s volatile and uncertain markets. Managing contract and spot market freight rates and contracts is easier with the right tools in place.

Calculate your potential Saving While Using an enterprise TMS

Get More Insight Into Your Contract and Spot Freight Costs With a World-Class TMS

While it is smart to diversify the number and types of clients and contract types, more contracts mean more challenges for management. Freight modality optimization and contractual diversity make it easier for shippers to maintain clear insight into shipping rates and costs.

Ideally, shippers have a fully integrated TMS platform that accurately tracks and monitors both contract and spot market freight rates in near real-time.

Contact MercuryGate today for a free demo and learn more about freight hauling contract management with a world-class TMS platform designed to help shippers manage spot freight and contract freight costs.

Check out a demo of MercuryGate today.

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