How to get spot freight coverage in tight markets
Shippers • Published on August 21, 2020
In the past few months, logistics teams have faced soaring tender rejection rates. In May, the FreightWaves Outbound Tender Reject Index was at near-zero levels. As of this week, it’s over 23%. With this volume of contract freight getting rejected, many logistics teams are in need of reliable spot freight coverage.
Why spot freight matters in tight markets
When a primary carrier rejects a load, the logistics team typically consults their routing guide, running through their list of backup carriers. In tight markets like this one, backup carriers are more likely to reject tenders for the same reasons that primary carriers do: Truckload prices are elevated above the initial prices that backup carriers quoted. Of course, this risk can be mitigated with Convoy’s dynamic pricing for backup freight, which surfaces real-time rates with guaranteed freight coverage in your TMS. But if you don’t yet have this service, it’s possible that the load could get rejected by all backup carriers and move to auction in the spot market.
Operational burden of traditional spot providers
Sourcing a carrier via spot introduces additional hassle and uncertainty. When you work with a broker, you’re put on hold while they negotiate with potentially unfamiliar carriers. When they offer a price, it’s hard to know whether you’re getting a fair deal. Worse still, there’s no guarantee that a broker will cover your load once they accept it. When this happens, you’re back to square one and have to go through the effort all over again.
If you’re coordinating several loads at a time, dealing with the spot market can place a significant operational burden on your team. Our customers tell us that they spend significant time contacting several brokers to make sure they’re getting a fair price for spot market freight. This process can also increase shipping costs substantially as the time horizon to pickup gets shorter.
In tight markets like this, there are significant benefits to working with a freight provider that will save you time, guarantee coverage for your spot loads, and consistently offer competitive rates.
Better alternative for spot freight coverage in tight markets
At Convoy, we designed our digital freight network to operate efficiently in tight and volatile freight RFP environments like the one we’re in today. We alleviate the burden of dealing with the spot market by providing reliable spot coverage with a number of benefits.
Saving time when getting spot freight quotes
Traditional freight brokers can take hours to identify available drivers and confirm pricing. This adds up to more of your time spent wondering if your load is covered and how much it will cost.
Convoy generates pricing instantly based on machine learning technology that analyzes millions of data points from Convoy’s shipment history and accounts for load characteristics, current market conditions, and other inputs. These algorithms run and adapt continuously, operating with speed and efficiency that saves time for our customers.
Confirming your freight coverage is guaranteed
It’s frustrating to have a broker back out after you’ve already accepted their offer. Unfortunately, most freight companies on the spot market don’t offer a coverage guarantee when they bid.
Convoy’s guarantee is a reassurance that most other freight companies can’t match. Our massive carrier base and our technology enable us to guarantee load coverage at the price we quote. We don’t back out of spot loads we accept, nor do we reprice spot shipments once we make an offer. As a result, our customers are never surprised by a discrepancy between a spot quote and their invoice.
Making sure your freight RFP quote is competitive
The best way to get a competitive price rate is to have carriers compete to win your business. This dynamic is one of the key inputs to Convoy’s pricing model.
We can surface your load instantly to hundreds of qualified carriers in your region that bid to
accept your freight. This ensures that the price you pay is based on real-time market data.
We also provide transparency with the rates we quote. In fact, you can visit our online freight quote tool today to see if our rate for any shipment is below, in line with, or above current market rates.
More about spot freight and your tender rejection safety net
Interested learning more about where spot freight fits into your freight transportation strategy?
Convoy recently published a free white paper: A Safety Net for Tender Rejection.