The trucking industry has two markets: the contract market and the spot market. In the spot market, truck capacity is bid on demand. In the contract market, there is a prearranged rate at which truckloads are moved. So, which is better?
Here is the reality of the industry: truckers sometimes opt to move more expensive freight on the spot market rather than honoring their contracted freight. And shippers who have contracts that are higher than spot rates, can usually break their contracts if they want to move loads on the spot market.
When trucking is in high demand, the spot rates are usually very similar to contract rates. But since the beginning of 2022 when trucking demand has fallen, the spot rates have been a lot lower than contract rates.
1. What’s behind the never-ending freight brokerage layoffs, Freight Waves, Feb 23, 2023. Accessed Apr 17, 2023.