In addition to these factors, FTL freight rates are also influenced by market forces. The two main market factors for FTL shipping are spot rates vs. contract rates and seasonal fluctuations.
Spot rates
Spot rates are short-term, market-driven prices that can fluctuate based on supply and demand. Businesses may contact a carrier to request a spot-rate quote when they have freight to deliver as a one-off, unplanned job.
Because spot rates are based on market conditions, they can fluctuate daily according to demand. That can lead to higher-than-expected costs — not ideal for businesses with tight or pre-determined budgets.
However, spot rates can lead to cost-effective FTL shipping when market conditions are right. The lack of stability can be challenging but can come with advantages — it all comes down to timing.
Contract rates
Contract rates are long-term agreements with set prices. Businesses may sign a contract with a carrier to handle their freight transportation for several months or years. Companies and carriers agree on a rate based on current market conditions.
Contract rates offer greater stability than spot rates — shippers know how much they’ll pay to transport their goods throughout an agreed period. They’re especially beneficial for businesses with consistent shipping needs. Contract rates also allow time to build a solid working relationship with a carrier, and consistently high-quality service can provide peace of mind.
Seasonal fluctuations
Just like other freight rates, the cost of FTL shipping fluctuates depending on the season. During peak periods, FTL rates rise because the demand for transportation is higher.
Autumn is peak season as retailers stock up for the holidays and anticipate increasing sales. Carriers are in higher demand during this period, and prices rise to reflect that. However, costs decrease during the early months of the year when retailers typically have less business.
Retail picks up again in April as customers prepare for the summer and public holidays. Fresh produce is also more readily available during this period (known as “produce season”), which puts trucking services in greater demand.
Another seasonal factor to consider is weather. Harsh weather conditions like winter storms can affect carrier availability and costs.