Every day, hundreds of thousands truck loads are moved in the nation. The loads include “last mile” loads, long haul (over 500 miles), and short haul (less than 500 miles). Approximately one third of all truck loads are moved in the spot market. The spot market is made up of transactional based freight where trucks and loads are usually negotiated and tendered on a one-by-one basis.
There are a variety of reasons a broker or shipper chooses to place their freight in the spot market. It could be a last minute, unexpected load or a contracted carrier that is suddenly unable to haul the load. It could also be that a broker chooses to place a percentage of their freight into the spot market to source new capacity, gain pricing advantages for certain lanes or, for 3PLs with their own trucks or they have exhausted their own resources. Spot market freight, or freight posted on a load board or freight matching service has always been thought of as a last resort for not only brokers but trucking companies as well.
At a recent closed-door, customer conference, Scott Moscrip, founder of Truckstop.com presented data that shocked the attendees (24 medium to large brokerage companies). He first asked the question: Why do you think trucks are searching for freight on a load board and what type of freight do you think they are looking for? He received the expected answers of “It’s a last resort” and “for backhauls only.”
Scott then revealed load search data broken down into three different segments: Backhauls, which are simply loads that would get the truck back to its home base; head/front hauls, loads leaving that truck’s home base; and inner hauls, where loads are moving point to point but the origin or destination is nowhere near the truck’s home base. Surprisingly, the breakdown looked much different than the group of brokers had anticipated.
Out of the 600 million daily load searches, front hauls made up 16% percent of the searches and backhauls only 11% of searches. A shocking 73% of searches are for inner haul loads. Also surprising was when Scott broke the data down by fleet size, the results were relatively the same. What does this data breakdown tell us? It tells us that owner operators and fleet owners are using the spot market to KEEP their trucks moving after that initial load, be it a contractual load or a spot market load. The spot market is not just a supplemental tool used on occasion or as a last resort, but a transactional tool used daily to run their business.
How do these percentages compare to why you are searching for loads in the spot market? Understanding behaviors of your peers can help you when searching for your next load, negotiating a rate, or determining your route. The information presented to those 24 brokerages changed their perception of the carriers using the spot market and I know they will be thinking a little differently the next time they post a load.
