How Spot Freight Makes Your Supply Chains More Agile

Whether shipments that are booked and priced individually, spot freight is something that can be utilized by both large and small businesses around the world.

The flexibility to use the current market rate for each shipment is one of spot shipping’s greatest benefits. With prices sometimes fluctuating daily, as a business you’ll be able to take advantage of lower costs during periods of freight recession (when cargo space is high due to low demand, and carriers have dropped their rates accordingly) to enhance your overall profitability.

Beyond the financial benefits, spot freight also helps make your overall supply chain more agile. As you’re not tied to contract pricing, you can allocate your cargo accordingly or look for alternative shipping options that match your current business need, helping you stay ahead of the competition and stand out to your potential customers.

When are Spot Shipments the Perfect Fit

Knowing how and when to opt for spot shipping is critical to ensure your business gets the maximum benefits. Some key situations where spot freight can be used to ensure agile supply chains include:

The Need for Flexibility

For businesses where shipping requirements can vary, opting for spot freight over contracted can be a huge advantage. As spot shipping allows you to book your shipments based on current demand, you’ll be able to maximize your financial gain.

Equally, the flexibility of spot freight means it can be used to great effect. Rather than relying on specific shippers, or the next weekly cargo allocation, your cargo can be moved more quickly as spot shipments are designed for immediate booking.

Market Shifts

Spot shipping can also be used by businesses looking to test new markets, perfect for startups. Generally shipping contracts will be negotiated for specific regions or port pairs, which may not be appropriate for your current business size. Instead, rather than committing to a long-term contract, you can investigate the impact that new markets can have on your overall profits on a case-by-case basis and adjust your overall logistics approach accordingly.

Similarly, for businesses operating in more volatile markets, spot freight provides the flexibility that allows you to be more dynamic in how you navigate market changes. This allows you to take advantage of favorable market shifts quickly and effectively, in turn aiding overall profitability.

Taking Advantage of Lower Rates

Monitoring market trends closely also allows you to make use of spot freight rates during periods of lower demand and reduce your overall shipping costs for a period of time.

Latest Shipping Services

Within the shipping industry new shipping routes and services regularly develop, and spot freight allows you to utilize when they become available. Not only can new routes help deliver good to markets faster, they also enable more efficient supply chains.

Capacity & Commitment

For smaller or medium sized businesses, spot shipping enables you to connect with your customers without committing to specific cargo volumes on a regular basis. Not only can this reduce your stress, but it also offers you the opportunity to grow your business at a steady pace. It is important to note that companies with an existing contracted shipping agreement can also take advantage of spot shipping. During peak periods during the year or demand spikes that your business might face from customers, your business may need more cargo capacity than your existing contract allows for. Looking for sport freight options could enable you to take full advantage of consumer demand and enables you to continually deliver the best option for your customers.

Empowering Agility: Spot Shipping vs Contract Shipping

While both spot freight and contract shipping have advantages for different situations. There are some key takeaways which may mean that one is more suitable over the other in certain situations.

Spot Shipping:

• Adapt to Market Shifts - Scale your freight up or down based on customer demand.

• Potential Cost Savings - Take advantage of competitive rates rather than fixed long term pricing.

• Flexible Carrier & Route Selection - More freedom to choose carrier and shipping route to avoid delays and bottleneck.

• Supply Chain Resilience - Reduce your reliance on specific shipping providers enabling you to diversify tour shipping options.

Contract Shipping:

• Fixed Pricing & Capacity - While less flexible than spot shipping, you will gain the comfort of long term stability and cargo capacity.

• Specific Routing Options - You'll have the experience of working with specific carriers and build up a strong relationship with their teams.

• High Volume Shipments - For businesses with consistent, predictable, shipping needs, contract shipping can be perfected.

Ultimately, both spot shipping and contract shipping have their place in supporting your overall approach to growing your businesses foreign markets. While spot freight offers greater flexibility, cost-efficiency, and adaptability, contract shipping provides a level of stability throughout your operations. A mixture of both enables your supply chains to be highly resilient in a complex Global environment that we are currently in.