The insider’s guide to booking spot market loads

If Shakespeare were a trucker, he would ask, “What’s in a load?” While I’m not as eloquent, I hope to answer this question from the standpoint of what a carrier should look for when booking spot market freight. Load bidding can be as much an operational art as a science. Below are a few key factors to consider when slumming it on the load boards looking to book some spot market freight.

(Disclaimer: Things I won’t cover include how to leverage dropped trailers to get extra revenue; how to wait until 4 p.m. and attempt to extort novice brokers for inflated rates; and finally, how to post my truck on a load board to get tons of phone calls by incorrectly putting the states I’m willing to haul into.)

First, consider your load’s characteristics

One of the most important things to consider on the spot market, as any good real estate agent knows, is that location matters. Knowing your truck’s starting location, empty time, driver availability and preferred lanes are also key to setting yourself up for success. Failure to take any of these into account will result in angry drivers calling you and possibly yelling at you for failing to meet their needs.

Important load characteristics:

• Origin/destination pair.
• Number of miles.
• Number of empty miles.
• Appointment windows.
• Commodity (we’ll come to this part later).

Origin and destination determine if you are going into a favorable market or if you will need to book a return trip earlier at the expense of future revenue.

Total loaded and empty miles are crucial. Most drivers can go 400 to 600 miles per day depending on region and driver characteristics. 

Appointment windows are also notable. A live load appointment versus a first-come, first-served window will greatly impact your driver’s and, therefore, your day. You want generous live load windows from 7 a.m. to 4 p.m. and live unload times in the early morning. 

Unfortunately, the freight market and the brokers who work the spot market often deal with customers that set unfavorable times. That will require a pricing strategy to overcome this lost utilization. 

Now, determine price

You’ve found the load, now it’s time to price it. Unfortunately, spot market conditions are rapidly deteriorating, so the old strategy of calling and asking for $1,000 over the market rate no longer works. And neither does immediately hanging up on the broker when he or she counteroffers. This now requires savvy business skills that I hope you paid attention to after signing the loan on a $75,000 used truck you bought that is rapidly depreciating and has over 500,000 miles.

Key factors to consider: 

• What is the spot market rate?
• What direction is this rate moving?
• What is the high, low and median price?
• Do I have pricing power?

When attempting to negotiate with a broker, try to ask for a higher offer than what is posted, but be ready for a counteroffer. (Or get hung up on, depending on the broker. I forgot to mention that when the market turns, the brokers like to hang up on the carriers.) 

Knowing that the average margin for a broker is around 10%-15%, you can reasonably expect some level of haggling, but depending on market conditions and pricing power, you might have to settle for the posted rate. Speaking of brokers, a few things to consider:

• Who is the broker?
• Does the company use a TMS? Or a load board? 
• How frequent are its tracking updates? Is tracking required?
• Finally, what’s the commodity?

Finally, think about the commodity

Honestly I consider commodities to be a major indicator of one’s quality of life after booking the load, followed by the broker itself. Going to a grocery or beer distribution center for a live load or unload appointment could be a recipe for disaster if you’re late or even on time, as they often deal with internal supply chain inefficiencies or spend a few extra hours counting the product. You also have to deal with lumper services or ready labor and could waste an hour trying to get a payment authorization code.

I prefer plastic products; most of those shippers may be run by engineers and want you out the door just as fast as you want to be gone. 

I avoid things like floor-loaded tires, furniture, flour, poorly stacked beverages, and baled recyclables or garbage. Yes, as it turns out, in parts of the upper Northeast they literally ship trash from landfills to other landfills. While you get a load, you’ll spend the next few days washing out garbage water from the trailer’s wooden floors. 

The downside with those mentioned commodities is that they are the ones most likely to utilize brokers to haul their goods. Most, if not all, customers use brokers to an extent, but certain commodities rely on them more due to internal supply chain characteristics. Some of these characteristics can include company size, lack of consistent volume and lack of a dedicated transportation department. Brokers step in and fill the role of finding carriers to haul loads but also take the heat from drivers when the customer fails to load them in a timely manner. This is a win for the customer, but for the broker, the margins must justify the added stress.

Therefore, a good strategy is to avoid underperforming shippers, brokers or commodities as much as possible to minimize the wasted time and higher blood pressure from your driver berating your load-picking skills.

Hip hip hooray! 

If you’ve made it this far, congratulations! You have hopefully booked a spot market load! While some of this article is lighthearted, the fundamentals of location, commodity, customer characteristics and time applied to most loads can help everyone appreciate the challenges we face daily in this chaotic supply chain.

Source: freightwaves - The insider’s guide to booking spot market loads
Editor: Thomas Wasson