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When (and by how much) will shippers shift to the spot market?

Compared to current contract rates, spot rates can offer shippers deep discounts. When will they take advantage of them?

After a record year of freight demand in 2021, carriers playing in the spot market benefited from a blank check when naming rates. The federal stimulus enabled consumers to pay off a mountain of credit card debt and, with cash to spare and little else to do, they turned to online shopping and ramped up spending on durable goods such as furniture and home appliances. 

Meanwhile, capacity was quite limited. Many carriers had exited the industry during the most recent downturn in 2019, while others left during the tumultuous period at the start of the pandemic in 2020. Of those remaining, many had not yet migrated to the markets where demand was highest, like Los Angeles. 

SONAR: OTVI.USA (blue; right axis) and OTRI.USA (green; left axis). Volatility for volumes and rejections throughout the pandemic. At the height of the boom for consumer goods, rejection rates hit almost 30%. 

In short, there was a great mismatch between supply and demand that allowed carriers (and brokers) to reap record profits from increasingly desperate shippers.

After a year of dealing with supply chain headaches, shippers broadly elected to raise their contract rates. Consequently, contract rates began to rise in the fall 2021 and really took off at the beginning of 2022. At the start of March, when spot rates began to experience a slower rate of growth, contract rates had risen more than 23% on a yearly basis.

SONAR: RATES.USA. Baseline view of the spread between dry van contract and spot rates. As of July 2022, the spread is wider than April 2020 during the economic lockdowns. 

Even without any external influences from the economy at large, these rising contract rates would have effected lower tender rejections. Lower tender rejections would have meant fewer loads falling to the spot market, which in turn would have caused spot rates to cool.

Shippers are finding themselves with the pricing power that until recently belonged to carriers. In their next bid cycle, shippers will likely push for lower contract rates. 

But shippers also have the freedom to take advantage of discounted rates from carriers in the spot market — just as carriers once sought higher spot rates from shippers.

Spot vs. contract: 2022 survey results

In June, FreightWaves conducted a survey of 1,364 shippers, carriers and freight brokers to learn more about current attitudes toward the spot market.

Brokers and carriers slightly underestimate shippers’ willingness to move their loads to the spot market. A majority from all three parties, however, agree spot rates only need to be 11% to 20% under contract rates before shippers start to shift their habits.

Source: FreightWaves’ 2022 spot vs. contract rates survey.

When it comes to seeking discounts in the spot market, shippers are more cautious about long-term pricing trends than some brokers and carriers assume. Nearly one-fourth of shippers say contract rates need to outpace spot rates for three to four months, whereas only one-fifth of brokers and carriers believe that waiting period is necessary.

Nevertheless, almost one-half of shippers, brokers and carriers agree that one to three months is an acceptable time frame before pulling the trigger.

Source: FreightWaves’ 2022 spot vs. contract rates survey.

Want to read more? The full results of the survey, including future expectations for layoffs, spot rates and volume, can be found in the Freight Intel Group whitepaper, “2022 Spot vs. Contract Survey,” which can be downloaded here.

For more information on the FreightWaves Freight Intel Group, please contact Michael Rudolph at [email protected], Tony Mulvey at [email protected], Joe Antoshak at [email protected] or Kevin Hill at [email protected].


  1. John

    Rates have to go up since fuel surcharge prices don’t cover what the driver loose everytime they haul cheap freight. Everything for a truck has doubled or tripled in price what the truck makes .I been trucking for 44 years and it just keeps getting worse every day one of these days we are going to show everyone how we can play hard ball we are the most important working class in the world without trucks the economy will die

    1. Chris

      I can’t tell you how many driver I spoke to last year, that bragged about how much money they were making, and they wipe their butts with 100 dollar bills. There are ebbs and flows, drivers need to learn how to run their businesses better and save their money for the lean times, like everyone else in the country has to do from time to time. Cost of living has gone up for us too and yet we are not getting the same increases in our pay either.

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Michael Rudolph

Michael Rudolph is a research analyst at FreightWaves and is a former freight broker. Prior to entering the logistics industry, Michael worked in academia. He holds an MA from the University of Chicago.