Dedicated and Spot Freight Contracts

freight contracts

The trucking logistics consultants process can be a long one for a shipper, but it’s well worth the effort. A dedicated contract offers guaranteed capacity and a set price for the freight being moved over a specific time frame. This makes it easier to forecast freight expenses, build strategic carrier relationships, and reduce long-term risk.

Dedicated contracts are often negotiated through a formal procurement process that includes an RFP. These contracts typically have a duration of six months to a year and are an ideal way for shippers to create consistent capacity, build strong carrier relationships, and uncover additional opportunities for savings with their logistics partners.

Finding Support: Warehouse Consultants Near Me

Alternatively, spot rates are the one-time, on-demand pricing that carriers and 3PLs charge to move freight from point A to point B. Depending on market conditions, spot rates can change day to day or hour to hour. When the supply and demand are balanced, a spot rate can be less expensive than a contract rate, but when market conditions are unbalanced, prices are usually much higher.

When shipping on a spot basis, sourcing and onboarding quality carriers is crucial. The most lucrative loads are from direct shippers, so it’s essential to spend the majority of your time pursuing these opportunities. However, it’s not always possible or practical to work with direct shippers, so a strong brokerage network is also important. This will allow you to quickly onboard and source loads that fit your capabilities.

Leave a Comment

Your email address will not be published. Required fields are marked *