Spot vs Contract Freight

By TLI

Category: Logistics

Topic: Freight, Truckload

What is the Difference in Spot vs Contract Truckload Freight?

A truckload shipment is a contract with a trucking company to transport goods on a truck that is exclusive to the shipper. This type of arrangement is different from less-than-truckload (LTL) shipping, in which multiple shippers share space on a single truck. Spot and Contract freight are the main types of pricing and sourcing methods of truckload freight.

Spot Truckload

Spot freight is the movement of full truckload shipments on a “spot” or on-demand basis. To simplify, the shipment is not part of a long-term contract or agreement. The shipment is booked on a one-time basis. This type of pricing is often used when needing to quickly move a large amount of goods and don’t have the time or resources to secure a long-term contract with a trucking company. In conclusion, spot freight can be an effective way to get goods to their destination quickly and efficiently. However, it can also be more expensive if there is not many carriers available in the area.

Load Boards: Powerful Spot Load Tool

Load boards are helpful to all parties. Think of a load board as a job-posting board. Shippers and brokers will post available pickups, destinations, and details in one place. Truckload carriers looking for freight will then call on the available loads. The vice versa happens with carriers posting their available equipment and ideal destinations. Most shippers will partner with freight brokers who have load boards available as most come at a premium subscription cost.

Contract Truckload

Contract truckload shipments are for shipping lanes that require reliability and consistency on shipments. Unlike spot loads, contract freight is on a re-occurring basis for a specific lane. Examples of a contract is a weekly Monday to deliver Tuesday shipment. Another example could be a drop-trailer lane where the driver drops off another trailer and takes the full trailer to the destination. Generally, the terms of the contract are negotiated between the shipper and the logistics solutions provider (LSP).

The Difference

The main difference between spot truckload and contract truckload freight is the type of agreement between the shipper and the carrier.

In spot truckload freight, the shipper contacts a carrier on a one-time, transactional basis. This is often done through a transportation broker that utilizes a load board. Partnering with a broker that properly vets carriers is of the utmost importance. Spot freight is more flexible and has a quick sourcing lead time to meet urgent shipping needs.

Contract freight involves a longer-term agreement between the shipper and the sourced carrier. The carrier agrees to provide trucking services for the shipper on an ongoing basis, typically for a negotiated rate. This is a great option for a shipper for special equipment, consistency, or the shipper has a high volume of one lane.

When to use Spot and Contract Freight

In brief, there is no “one size fits all” advice to this question. The better option depends on a shippers freight operations. Below are general guidelines of when to use each type of freight:

Lane AttributeType of Pricing
Saving money is a goalSpot
One-off, InconsistentSpot
Multiple, Regular LaneContract
Need for known ReliabilityContract
Specialty Program (Ex: Drop Trailers)Contract
The table provides an overview of general thoughts on which type of pricing is best. However, different situations may require different solutions.