What Is A Spot Freight Quote & How To Get The Best Rates
To put it simply, when #ShipHappens, spot quotes are needed. In a pinch with deadlines looming and logistic nightmares on the horizon – there’s no time for anything but a quick phone call and spot quote request.
Let’s answer some of the important questions when it comes to spot freight quotes.
What is a Spot Quote?
A spot quote, or spot price, is a provided rate for a shipment that needs to be sent immediately or urgently. In the spot quote world, price is king. Spot freight refers to trucking industry where suppliers, distributors and brokers coordinate for competitive prices and 24/7 efficiency. Spot quotes are necessary in a number of situations (more on that below).
The spot quote process generally works like this:
- The freight broker or provider receives a quote request, the process can start with a phone call, email or an integrated website form.
- The shipper and freight team set the standards for the shipment which includes: weight and dimensions, load type, origin and destination, arrival deadline and other one-off factors.
- The freight team plugs all the available resources into a modeling tool and spits out a rate (if the price is too high, suppliers might feel like it’s actual spit).
- The supplier/shipper then decides to use the perspective company or continue to shop around for the best rate.
The process is relatively simple which allows for tight deadline shipments to occur. But the simplicity also takes out the advanced research and forecasting that goes into a contract rate process. Let’s look at more differences between these two methods.
Spot Quotes vs. Contract Quotes
In a contract quote environment, there’s significant time scheduled for cost analysis which includes an inspection of all the project details and how they will change over time. The key driver of freight rates is load-to-truck ratio, as in available truck capacity compared with amount of shipments. For spot freight quotes, this number is just a snapshot of the current environment. For contract quotes, this ratio can be analyzed and forecasted which leads to cost savings over time. Also, shippers are not as affected by supply and demand or market forces with long-term agreements. A few additional factors go into the decision process:
- Urgency – Rush shipments are the main driver of spot quote needs. Freight service providers will often add an expiration date along with their quote as price can vary by week or by day.
- Scope – Project scope is the biggest factor besides price and timeliness. Specialized shipments with multiple destinations and regulations will be difficult to deliver with just a spot quote and lack of long-term analysis.
- Load Type – Many spot quotes are required for less-than truckload (LTL) shipments that fill only a portion of a full-sized freighter. There are many LTL variations for different types of freight that have similar needs.
- Relationship – Contract quotes require a long-term relationship and substantial back and forth to be worthwhile. A spot quote on the other hand is commonly provided without any prior relationship.
- New Lane/Opportunity – For shippers with a potential new lane of business, spot quote is a great first step to understand cost and price while making sure their logistic network functions accordingly.
How to Automate Your Spot Quoting Process
Many companies find themselves in a bind when trying to decide between spot quotes and contract procurement. The contract option might be too expensive or time consuming and some companies just don’t have the available resources.
Conversely with spot quotes, the process can be overwhelming. With so many things to track, manage and coordinate, a platform that automated every process sure would be nice, oh that’s right we offer just that, Cargobase.
In addition to road freight, Cargobase can assist with spot quotes for ocean, parcel, air, and rail freight. The platform is designed to be a one-stop shop for all freight processes and modes. The integration of shipping management automation to your business can reduce 80% of your workload and cut costs by 25%.
Get Ship Done & Simplify the Shipping Madness
Get started using Cargobase for free today, and manage all of your logistics from one place in an easy to use online platform.