Shippers and carriers interact with the market differently, but one thing has become clear over the past few years: Contracts and dedicated lanes allow both parties to gain stability in an unpredictable landscape. Accessing those contracts and making them work, however, can be difficult. RXO has set out to change that.
RXO has officially spun off of XPO. The company is laser-focused on deploying technology to scale, and it became the fourth largest full truckload brokerage at its inception.
“The RXO piece allows us to go an inch wide and a mile deep in terms of our ability to service our customers,” RXO Vice President of Technology Alyssa Myers said.
In order to better understand its customer base from the very beginning, RXO partnered with FreightWaves to conduct research on how both shippers and carriers feel about the current freight market, contracts and the spot market.
“From a high level, we wanted to better understand how spot and contract dynamics are different between our shippers and carriers,” Myers said.
The research made it clear that both carriers and shippers want to be able to take advantage of changing market conditions. Both parties, however, also emphasized the importance of predictable rates and guaranteed capacity.
In reality, shippers have a stronger tendency to concentrate their freight into contract, and carriers tend to rely more heavily on the spot market. This suggests that carriers like the idea of locking in rates and having dependable volumes, but it isn’t really happening for them.
Carriers may rely heavily on the spot market for a variety of reasons, ranging from the fear of missing out on competitive rates in a strong market to limited access to high-quality contracts in the first place.
While resorting to the spot market can result in short-term gains in a good market, having dedicated lanes that hold strong throughout any market conditions will almost always offer carriers the best long-term financial opportunities. Securing those dedicated lanes is the first – and often most challenging – step.
For small carriers, gaining access to reliable revenue means getting a foot in the door and securing high-quality contracts. RXO helps carriers do just that.
The company helps carriers access desirable contracts through both the RXO Connect carrier web product and its proprietary TMS offering, according to Myers.
RXO Connect allows carriers direct access to opportunities, enabling them to issue bids on dedicated lanes within the platform. The company’s TMS product takes it one step further by matching carriers to specific dedicated freight opportunities and even suggesting a rate.
“When we talk about digital coverage, getting our carriers set up on these opportunities really boosts our ability to automatically, digitally cover freight,” Myers said. “With our technology, we’re able to cover a much larger volume of freight with relatively low effort.”