If you’re a shipper or a trucker, then you should know about the shipping and trucking spot rates. Because after understanding them clearly, you will be able to price yourself effectively in the market and on the freight bidding boards.
Keep reading further as we have explained all the important details related to spot rates in the air/ocean shipping and trucking industry.
What is Spot Rate
It is the current freight rate for shipping a consignment to a specific destination. This is actually a one-time rate that depends solely on the demand and supply gap. It means the rates will be low if the number of available vehicles exceeds the shipping load and vice versa. The spot rates depend on the current scenario and change with each passing minute.
Spot Rate in Trucking and the Factors Influencing it
The spot rate in trucking is a market rate that persists based on the availability of trucks and the demand by shippers. If the shipper’s demand is high, the rate will be increased, and if demand is low, then the rates will be stable or decreased.
Almost every truck including dry vans, refrigerated trucks, and others sets its spot rates depending on the current market balance.
Some crucial factors that can affect the spot rates.
- Number of Trucks
- Driver’s availability
- Origin-Destination pairing
- Unpredictable market conditions
Ocean Freight Spot Rates
It is known as sea freight spot rate or sometimes the container spot rate. You will get this price according to a single vessel. This rate is dependent on per kg goods shipment charges. It is also affected by the space acquired by your goods.
The ocean spot rate will be different for different vessels. The on-carriage, pre-carriage & carriage fees and activities also play an important role in determining spot rates.
Air Freight Spot Rates
This spot rate is for the emergency transportation of goods across the borders. Some airlines charge high rates in case of urgency. The air freight spot rate depends on the volumetric weight of the cargo. It also varies over time. This rate is calculated according to the per kg formula.
Where You Can Find the Spot Rates for Loads
You can find the spot rates and contract rates at a freight rate index. These platforms calculate the rates according to the local market and provide fresh updates about the shipping rates. You can search ocean freight rate, air freight, rail freight, truckload, etc on these platforms.
Load boards are digital marketplaces where shippers and carriers combine together and share the most recent data.
Advantages and Risks Associated with Spot Rate
The spot rate allows more flexibility for the shippers to send goods even in low quantities and on short notice. You can also send your products timely in peak season by paying a spot rate to the carrier. On the other hand, spot rates are always higher than the contract rates. Spot rates are more volatile and can be very risky sometimes.
FAQs
How is Spot Rate Different From Contract Rate?
A contract rate is a fixed rate offered by a carrier for a specific period to ship your products while a spot rate is a current market rate that solely depends on the market situation.
When Should You Choose Spot Rate?
You can go with the spot rate in case.
- Emergency shipments are sent to the destination timely.
- The goods are low in quantity, so contract rates don’t apply to the lower quantities.
- Your primary and backup carrier is not responding timely to take your shipments.
Final Words
If you really have a good know-how of spot rates, you can close a reasonable deal as a shipper to transport cargo shipments. In case you’re a carrier/trucker, you will tell your customers the current market rates for shipping via roads ,air and sea. Contact us at Bansarship for transporting your products from China to any place of the world.
