What Is a Spot Quote and How to Get The Best Rates Out of It?

What is a Spot Quote?

A spot quote is a provided rate by carriers for a shipment that needs to be sent immediately or urgently.

In general, the spot quote process works like this:

1. The freight broker or provider receives a quote request, the process can start with a phone call, email or an integrated website form.

2. The shipper and freight team set the standards for the shipment which include: weight and dimensions, load type, origin and destination, arrival deadline and other one-off factors.

3. The freight team plugs all the available resources into a modelling tool and determines a rate.

4. The supplier/shipper then decides to use the prospective company OR continue to shop around for the best rate.

As you can see, the process is relatively short as compared to securing a contract quote. This allows for tight-deadline shipments to be facilitated efficiently. For a regular contract quote, it generally requires advanced research and forecasting prior to securing a reasonable quote.

Before we look at how shippers can secure the best rates out of spot quotes, it would be good to first understand the differences between these two types of freight quotes.

Spot Quotes vs. Contract Quotes

Spot quotes and contract quotes represent two distinct paths in the shipping landscape, each catering to different needs. The best freight management strategies involve securing the best spot and contract quotes efficiently to save costs and optimize returns.

For contract quotes, they are essentially fixed freight rates for a specific period of time. They are often negotiated and once a reasonable figure is locked in, it offers the shippers a peace of mind for a set period, regardless of market fluctuations. This translates to smoother budgeting and eliminates the stress of scrambling for quotes during the last minute.

However, the rates in contract quotes are not flexible after it has been agreed upon. Factors such as unpredictable shipping needs or unexpected volumes might require renegotiations or even incur additional costs. Moreover, securing a competitive rate could be harder than it seems to be, especially when there’s consistent shipping needs that’s not substantial enough to warrant significant leverage.

Spot quotes on the other hand, are freight rates quoted on an ad-hoc basis and they are ideal for situations such as last minute shipments or shipping disruptions. They are also more flexible as shippers can capitalize on temporary dips in rates or find carriers with surplus capacity, such as LTL carriers to deliver urgent shipments on time.

That being said, focusing on spot quotes alone is not a practical freight strategy. Rates quoted can be volatile and be affected by factors such as fuel costs, seasonality, and even geopolitics. It would be very inefficient to monitor every shipment based on spot quotes and if most shipments are shipped out on a high spot rate consistently, businesses could incur huge losses in the long run.

Securing the Best Rates from Spot Quotes

Usually, when there is a need to secure spot quotes, things are already hectic and the pressure is high. But, this doesn’t mean that every situation has to be a scramble. Here are a few steps you can take to secure the best rates:

Provide the right shipment details

Spot quotes are quoted based on the requirements of each shipment and it’s always best to provide the most important details that will help ensure the success of your shipment. The clearer your shipment details are, the higher the chances will be for you to secure a low rate as it helps to eliminate bottlenecks and further delays for the carriers.

If any of the important details are excluded, it could result in more costs incurred later on.

Some of the important details include:

• Incoterm
• Pickup contact details
• Delivery contact details
• Packing specifications
• Additional requirements
• Additional documents

Get spot quotes in advance

Even though spot quotes are more suitable for last minute or unpredictable shipments, it’s still a good practice to secure them in advance as spot rates tend to become more expensive as the day to ship gets nearer.

Therefore, it’s best to secure them as soon as the shipment details have been confirmed.

Cheapest spot quotes are not always the best option

The cheapest rates are not always the best if they don’t deliver according to your expectations, don’t you agree?

Bear in mind that a missing shipment will always result in more unnecessary costs and time wasted as compared to securing a reliable shipper that quotes you a reasonable but not the cheapest rate.

Hence, price is not everything. When selecting a carrier or freight forwarder, it’s always wise to make sure that they are also trusted and have proven to be reliable in their services.

A good practice is to cast your net wide by securing quotes from various freight forwarders or carriers you can trust and determine the best rates thereafter.

Check the spot quotes

Every quotation comes with a set of fine print and it’s always important to check them before going with it to prevent any unexpected costs or misunderstandings.

This will include the terms of the spot quotes. Some of the terms that are worth checking could be whether the fuel costs included in the quote or are there any accessorial charges.

Optimizing Your Spot Quote Processes

Though the spot quote process could look simple on the surface, it could be overwhelming to coordinate in the scenario where there are delays or disruptions.

In today’s supply chain, technology is ever more important to help companies cope with challenges exacerbated by matters beyond their control, such as geopolitics and climate change.

This is where cutting edge transportation management systems like Cargobase TMS come into the picture. Its advanced spot buy procurement tool is specially designed for supply chain professionals to eliminate complications of the spot buying process and acquire the best rates quickly. Plus, Shippers can work with their vetted and approved freight forwarders to ensure quality and compliance standards are met.

It also gives you visibility over your shipment in a single screen; and improves collaboration and communication across internal teams and your freight forwarder.

To find out more about how Cargobase TMS can help you acquire the best rates for your spot quotes, be sure to contact us for a solution that works for your company.