Factors Influencing Shipment Decisions Between Contract and Spot Markets

This document is a guide that outlines the factors to consider when deciding whether to send a shipment through an existing contract or directly to the spot market. It emphasizes the importance of understanding the carrier's perspective and operational dynamics, which can affect cost implications. The guide details a segmentation approach that helps shippers identify which segments of their network are better suited for spot market transactions versus contracted shipments. It discusses the distinct revenue structures of asset-based carriers and non-asset brokers, and how these differences impact decision-making. Additionally, the document explains the role of lead time on load acceptance probability and the associated costs of rushed shipments. It also highlights the significance of historical demand patterns and facility processes, including detention times, in optimizing shipping strategies. The guide concludes by stressing the necessity for shippers to maintain competitive contract prices and improve relationships with carriers to enhance operational efficiency.