Looking for ways to lower your freight shipping costs? Understanding the uses of a spot market will make it easier to control your shipping services and keep your business profitable — while keeping your customers happy at the same time. Let’s take a closer look at how to use a spot market and what kinds of benefits it offers.
What Is a Spot Market?
In the shipping industry, the spot market is where shipping capacity is bought and sold on a short-term basis. This means that the shipper does not have a contract with a carrier in advance, but rather negotiates the price and terms of the shipment on a per-shipment basis.
Spot rates are typically higher than contract rates, as the carrier is taking on more risk by not knowing how much cargo they will be carrying or when it will be delivered. However, the spot market can be a good option for shippers who need to move cargo quickly or who are not sure how much cargo they will be shipping in the future.
The spot market is also used by carriers to fill empty space on their vessels. This can be beneficial for both the shipper and the carrier, as the shipper can get a lower price and the carrier can avoid losing money on empty space.
The spot market is a volatile market, and prices can fluctuate rapidly depending on a variety of factors, such as demand, supply, and overall economic conditions. This can make it difficult for shippers to plan their transportation costs, but it can also be a way to get a good deal on a shipment.
When You Need the Spot Market
The spot market is most useful for businesses under the following circumstances:
- Last-minute changes in shipping requirements
- Specific shipments needing more competitive rates
- Increased demand based on sudden changes in the market
Things That Influence the Cost of the Spot Market
Due to the nature of the market, the cost for effective use of the spot market can change. Stay ahead of the game by being aware of the factors that can positively or negatively impact the spot market, such as:
Depending on the season, there may be more or fewer couriers available to carry out the necessary shipments.
While some routes may be faster than others, they may be unavailable for a variety of reasons. These can include detours, construction, road closures, and weather.
A significant factor within the shipment and courier industry is fuel. Fuel prices can fluctuate throughout the year and can cost more or less depending on the influence of other factors, such as the season.
Supply and Demand
Availability of couriers may vary based on the needs of their services.
Benefits of a Spot Market
When you invest in courier and shipping services, your organization can benefit from a spot market. Benefits from working directly with the courier can include the following:
Get the shipments sealed and delivered when you need them completed.
When your shipments are delivered directly from the shippers to their location, know that it is handled both efficiently and with care.
By reducing empty backhauls, shippers will be able to optimize their trucks. Due to the competitive nature of a spot market, couriers are more likely to provide more optimal pricing.
Making the Most of a Spot Market
Working within a spot market can benefit your business throughout the year. Making the most of each shipment can save your organization time and money. By taking into account the factors of what makes a thriving spot market, your organization can take future shipments to the next level.
Beitler Logistics Services is here to make sure your goods are moved securely at the best price available. Our team is here to provide support for both quick shipments and long-term freight services.
Ready to learn more about successful transportation logistics? Contact us today.