The turbulence of the truck spot market can significantly hurt trucking companies’ bottom lines. By developing dedicated freight lanes through contractual partnerships with major shippers, truckers can lock in stable pricing and consistent volumes between high-traffic endpoints.
This article explores practical strategies for creating profitable dedicated lanes, building relationships with shippers, optimizing operations on core routes, and leveraging technology to gain resilience against the volatility of spot rates trucking. We’ll show how focusing on recurring lanes through collaboration and service excellence provides a steady, reliable revenue stream for truckers.
And when you’re finished reading, check out the other articles in our ‘Semi truck freight lanes’ series:
- Why are freight lanes good for carriers?
- Developing freight lanes to avoid truck spot market volatility
- Truckers’ guide to identifying profitable dedicated lanes
- Best tools for building dedicated lanes for carriers
What is a freight lane in trucking?
In trucking, a freight shipping lane refers specifically to a common route traveled by truck drivers to transport cargo from one location to another. Some key points about freight lanes in trucking:
- Freight shipping lanes connect major markets, distribution centers, and logistics hubs that have high demand for trucking transportation.
- They are typically between large cities or metro areas where there is consistent freight volume in both directions. Popular one-way and roundtrip truck routes emerge.
- Factors in determining major trucking freight lanes are proximity of destinations, highway and road infrastructure, regulations, optimal routes, and demand.
- Trucking companies analyze historic volumes and customer demand to identify the highest paying freight lanes to focus on.
- Major truck lanes might be between ports and inland shipping hubs, manufacturing zones, consumer markets, or along border trade routes.
- For owner operators and independent drivers, choosing the best freight lanes for hauling contracts is based on mileage, tolls, time, and profitability.
- Large trucking firms will dedicate drivers and equipment to run regular routes along high-density freight lanes.
- Trucking lane solutions and technology are increasingly helping drivers optimize routing, freight prices, and loads along busy transportation corridors.
- Congestion, construction, regulations, and tolls along shipping lanes impact the trucking market, including trucking spot rates. High-volume lanes see intense freight traffic.
So in trucking, freight lanes are the most active and profitable routes that trucking companies and drivers repeatedly service to move freight efficiently.
Spot truck freight rates vs dedicated trucking freight rates
Dedicated freight lanes and rates have some key advantages compared to volatile spot market trucking rates in providing stable pricing and capacity for shippers.
Dedicated rates are pre-negotiated and contracted for specific lanes in trucking over a set time period. This gives shippers consistent cost levels and service reliability versus fluctuating spot freight rates subject to market swings. While truck spot rates may occasionally spike higher than contracted trucking prices, dedicated freight market rates avoid the uncertainty in budgeting and capacity that shippers face dealing with random carriers in the spot market.
Trucking industry carriers also benefit from having assured volumes on recurring routes versus inefficiently chasing spot loads. Though dedicated lane rates may be lowered initially to win contracts, the guaranteed truck lane activity translates into stable revenue. Carriers can optimize their operations for contracted freight pricing by deploying reliable drivers and strategically positioning assets.
Additionally, administrative burdens and risks decrease when freight industry shippers and carriers work repeatedly together. Payment and invoice disputes are less likely with existing relationships versus random spot rate interactions. Dedicated logistics lane contracts build transparent, efficient routines for documentation, loading, and delivery coordination.
Overall, freight rate and capacity stability, along with streamlined processes, make dedicated trucking lanes an advantageous freight solution. The consistency provides truck rate savings for shippers over time while carriers expand their customer portfolio with contracted dedicated lanes for carriers versus unpredictable spot freight rates.
10 tips for building dedicated lanes to avoid truck spot volatility
Here are some effective ways truckers can develop dedicated freight lanes to avoid spot market volatility:
- Build relationships with shippers that have regular, high-volume routes. Pitch them on a mutually beneficial partnership with reliable capacity. Offer discounted truckload rates in return for guaranteed volumes.
- Look for shippers with continuous moves between major warehouse hubs or distribution centers. For example, regular routes between ports, sorting centers, and retail stores.
- Leverage load boards and auction sites to source contracts for repeating trucking jobs at a reasonable truckload rate.
- Gather seasonal and cyclical truck trends data, and propose contracts timed to meet prospective customers’ specific needs.
- Join trucks to rail intermodal routes that have steady volumes between hubs. Partner with intermodal marketing companies.
- Specialize in a geographic region and become the go-to carrier for major lanes in that area.
- Maintain excellent service levels on contracted lanes to retain and expand business.
- Optimize equipment, drivers, and routes to lower operating costs and freight trucking rates on dense lanes.
- Use technology to source contracts, seamlessly manage dedicated lanes, and provide supply chain visibility.
- Consider joining a cooperative or forming partnerships to combine volumes on high-demand lanes.
The key is building long-term relationships and running tight, efficient operations on core lanes to provide value. This insulates truckers from the ups and downs of the spot truck market.
Avoid truck spot market volatility with these lane development tips
The unpredictable swings of the spot market highlight the need for trucking companies to insulate themselves through dedicated freight lanes. By providing operational excellence and collaborating closely with shippers, truckers can shift towards the stability of contracted lanes over high-density routes. Developing lasting partnerships and optimizing the efficiency of core lanes are key strategies to smooth out the inevitable ups and downs of the spot market and build resilience into any trucking business.
FAQ
The spot market in trucking refers to one-time shipments that are offered on-demand, often through load boards, as opposed to contracted freight with a predetermined price. Trucking companies or independent drivers can choose to take spot market loads as needed.
It is called the spot market because shippers are purchasing trucking capacity “on the spot” for immediate one-time needs, rather than securing capacity long-term through a contract. The carrier rates and terms are for shipment in the immediate spot in time.
The most profitable freight for truckers tends to be steady, recurring lanes moving high volumes between major hubs under contract, rather than unpredictable one-time spot moves. This contracted freight brings reliability and efficiency.
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