Spot vs. contract freight
Spot loads pay the market price today. Contract freight trades some upside for steady volume. Most small carriers need a mix.
Key takeaways
- Spot freight is booked one load at a time at today's market rate, mostly through brokers and load boards.
- Contract freight is an agreed rate for a lane over a set period, usually won in a shipper's bid.
- Federal law lets a carrier and a shipper sign a written contract for specified services, rates and conditions.
- Small carriers usually get contract-style work through brokers first, by running the same lanes well.
What spot freight is
A spot load is a one-time shipment priced for today's market. The shipper or broker needs a truck now, posts the load or calls carriers, and the rate is negotiated for that one load. Most spot freight for small carriers comes through brokers and load boards. Each load has its own rate confirmation.
What contract freight is
Contract freight is a lane (for example, one plant to one warehouse) at an agreed rate for a set period. Shippers usually award it through a bid, often called an RFP. The winning carriers go into the shipper's routing guide, the order in which the shipper offers loads. When a load is offered ("tendered"), the carrier can accept or reject it.
Under federal law (49 U.S.C. 14101(b)), a carrier can sign a written contract with a shipper for specified services under specified rates and conditions. The parties can't waive the rules on registration, insurance or safety fitness. Brokers also offer contract-style work, such as dedicated lanes with a set rate for regular loads.
Pros and cons
| Spot | Contract | |
|---|---|---|
| Rate | Moves with the market, up and down | Set for the contract period |
| Volume | Find every load yourself | Repeat loads on known lanes |
| Flexibility | Go where the freight pays best | Tied to the lane and schedule |
| Planning | Harder to plan weeks ahead | Easier to plan home time and fuel |
| Who gets it | Any carrier with active authority | Carriers with a track record on time and service |
Contract rates don't follow the market, so they can look great in a weak market and thin in a strong one. Know your cost per mile before you lock in any rate.
Why most small carriers mix both
A few steady lanes cover your fixed costs. Spot loads fill the gaps, cut deadhead (empty miles) and let you take advantage when the market is hot. Relying only on one big contract customer is risky: if they cut volume, your week is empty.
How small carriers get contract lanes
- Run the same lanes. Pick a few lanes near home and run them again and again so brokers learn you're reliable there.
- Build broker relationships. Brokers hold a lot of contract freight. After a few clean loads, ask the rep: Do you have this lane every week? See how to negotiate rates.
- Keep a clean record. On-time pickup and delivery, fast updates and clean paperwork are what get you offered repeat loads.
- Keep your carrier packet ready: authority, W-9 and insurance certificate. See the carrier packet checklist.
- Go direct when you're ready. Some shippers will work with small carriers on lanes their big carriers don't want. See how to find direct shippers.
- U.S. Code: 49 U.S.C. 14101, contracts with shippers
- eCFR: 49 CFR 371.3, records kept by brokers
- Federal Register: Definitions of broker and bona fide agents (2023)
This page is general information, not legal or tax advice. Rules change; confirm with FMCSA, the IRS or your state before you file.
Questions carriers ask
What is spot freight?
A one-time load priced at today's market rate, usually booked through a broker or load board.
What is contract freight?
Freight on a set lane at an agreed rate for a set period, usually awarded through a shipper's bid and offered to carriers in a routing guide.
Is contract freight better than spot?
Neither is always better. Contract gives steady volume at a set rate; spot follows the market and gives you flexibility. Most small carriers use both.
Can a dispatcher get me contract lanes?
A dispatcher can book repeat loads and build lanes with brokers for you. Under FMCSA's 2023 guidance, a dispatcher without broker authority shouldn't negotiate freight directly with shippers, so direct shipper contracts are between you and the shipper.