Most truck-bound freight, usually upwards of 80%, is moved under a contract, either between a shipper and an asset-based carrier or a shipper and a broker or 3PL, or some mix thereof. Historically, freight contracts have been dominated by larger motor carriers, with smaller carriers picking up loads from other carriers, brokers, or via load boards (where brokerages post loads often under contract with a shipper).
This dynamic often leaves smaller carriers more sheerly exposed to market forces and rates volatility, riding the ups and downs of cyclicality in freight demand and capacity. That feast and famine effect was on direct display over the past year: Even though carriers of all sizes felt the impact of the spring 2020 downturn, the freight demand lapse battered small carriers the hardest. Then, in the recovery period over the back half of 2020, smaller carriers were able to take advantage of surging spot rates.
With uncertainty still lingering in the market in the months ahead, contract opportunities available from platforms like Loadsmart offer carriers of all sizes stability in their operations and a potential bridge to less volatile times — while allowing them to retain the ability to take advantage of tighter markets with higher rates.
“You can build a business around having stable, consistent freight,” said Jordan Abrams, Loadsmart’s Director of Carrier Sales. “While still having the ability to bid on spot opportunities at premium revenue points. You can have rate-protected freight and access to freight that fluctuates with market conditions.”
Contract opportunities from Loadsmart allow carriers, from those with one truck up to tens of thousands of trucks, to book dedicated lanes from top shippers at locked-in rates in the time period that works best for their operation.
“We’re flexible with our contracts,” said Jordan Abrams, Director of Carrier Sales. “We understand there are times when you want to be playing the spot market. And we understand there are times when a contract is king.” Common contract lengths include three-, six-, and 12-month options.
As a carrier uses Loadsmart’s platform to book loads and input their user preferences, the system learns about the types of contracts that a carrier might be interested in securing. For example, if a carrier frequents lanes from Dallas to Charlotte, Loadsmart could offer a contracted opportunity for that lane. All contracts include at least three loads a week within the parameters set by the carrier.
“It’s about consistency,” said Chad Taylor, Head of Capacity Development at Loadsmart. “Carriers can find consistent volume to put in their network and have some built in business, then they can focus on trucks they don’t have committed volumes for.”
If you’ve enjoyed these insights and have questions or comments, start a conversation with us on your loadboard, resource center, or send an email to capacitydevelopment@loadsmart.com
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We are industry veterans and data-scientists using innovative technology to fearlessly reinvent the future of freight. As the ‘nerds of logistics’, we seek intelligence in data to solve deep-rooted inefficiencies in the industry. We give shippers, brokers and carriers access to our data connections (linking supply and demand) and suite of award-winning solutions to strike the perfect balance of cost and service. We’re creating a more efficient and environmentally responsible way to move more with less. For more information, please visit: https://loadsmart.com