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From Labor Day, Halloween, Thanksgiving and more, the holidays can create a surge in demand for trucking capacity. Now is the ideal time to prepare for potential spikes.

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Spot and contract freight play essential roles in the movement of goods, and both options offer different value propositions for shippers. Recently, freight market volatility has challenged both shippers and carriers with fluctuating demand, natural disasters, economic shifts and more, making it difficult to forecast costs accurately.

Additionally, wide swings in trucking capacity have further complicated freight management, requiring shippers to monitor and strategically utilize both spot and contract options. Understanding when to utilize which solution can help shippers maximize freight spending, meet service levels, optimize shipping strategies and mitigate risks during uncertain market conditions.

Understanding Contract and Spot Rates

With contract rates, shippers commit freight to a carrier or logistics provider, and the carrier or logistics provider commits capacity for an agreed-upon rate. Contracts provide the security of price and capacity and make up the majority of freight moves. Contracts tend to last six months or longer.

A spot rate is the one-time, on-demand, transactional price a carrier or provider charges to move freight from point A to point B. Spot rates are based on the current market conditions and can change day to day or even hour by hour. The spot market can be highly volatile. Severe weather or unexpected disruptions can drive prices higher quickly.

Like most things, supply and demand factor into the prices of both contract and spot rates. When trucking capacity is tight, spot rates tend to increase and contract rates experience upward pressure. When capacity loosens, spot rates typically fall and future contract rates decrease. Spot rates, which are instantaneous, are a leading indicator for contract rates, with contract rates tending to lag behind spot rates by about four to six months.

There are times when the spot market provides more competitive pricing than contract rates. Some shippers “channel shift” and move to the spot market to take advantage of lower rates. However, disruptions experienced over the last few years have shown how critical long-term relationships are to the successful movement of goods during challenging times.

Determining the Best Option

Market uncertainty is expected to continue for the foreseeable future, and shippers will want as many channels as possible to move goods.

Contract freight offers guaranteed capacity at a predetermined, agreed-upon price, making it easier to forecast freight expenses. Contracts also provide opportunities to negotiate rates and fuel and accessorial charges, which are typically fixed in the spot market. Entering contracts also allows shippers and their logistics partners to develop strong, reliable relationships that can help ensure access to capacity during peak periods, improve service and uncover additional opportunities for savings. Overall, strong relationships can be critical to long-term success.

The spot market offers shippers flexibility and can provide valuable space when there is a planned or unplanned surge in demand, new shipping lanes develop faster than anticipated, or incumbent carriers reject loads. The spot market may also work best on some lanes, especially if they are inconsistent.

Volatile market conditions often drive freight into the spot market, and brokers can connect shippers with thousands of smaller carriers working primarily in the spot market. Because of the flexibility brokers offer, shippers don’t have to commit to more capacity than they need until they need it. Plus, utilizing all available carriers is critical to the functioning of the entire supply chain ecosystem.

Factors to consider include:

  • The overall network
  • The amount of freight to move
  • The consistency of freight
  • The level of service/specialization needed
  • Seasonal surge demand
  • Anticipated growth
  • Contingency plan needs

Developing a Strategy

Penske Logistics can work with shippers to evaluate their overall network and identify opportunities to increase efficiency, such as consolidating multiple less-than-truckload shipments into one cross dock. From there, the Penske team can review capacity needs, individual lanes, planned surges, anticipated growth, and current market conditions to help shippers determine the right mix of contract and spot freight for their operations.

Transporting goods is a complex process, and the trucking industry faces a wide range of operating challenges. Shifts in capacity, fluctuating rates, rising insurance and fuel costs, and the ongoing driver shortage create uncertainty for shippers. At the same time, customer service demands and regulatory requirements continue to increase, leaving many shippers looking for a solution that will provide secure capacity, steady rates, and high levels of service, all while mitigating the risks of operating a private fleet.

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The Food and Drug Administration (FDA) has issued new requirements for additional traceability records for certain foods, ranging from nut butters to cut veggies to shrimp, under the Food Safety Modernization Act (FSMA). The requirements, which take effect on Jan. 20, 2026, create new traceability record keeping requirements beyond those in existing regulations for certain foods. All entities in the supply chain will be subject to the Food Traceability Rule.

The FDA said the changes, which require entities to share information with others in the supply chain, will allow for faster identification and rapid removal of potentially contaminated food from the market, resulting in fewer foodborne illnesses and/or deaths.

The list of foods includes some cheeses, eggs, certain vegetables, including cucumbers and leafy greens, some fruits, including melons and tropical tree fruits, fresh-cut fruit and veggies, some fish, nut butters, and ready-to-eat deli salads, such as egg salad, potato salad, pasta salad and seafood salads.

In preparation for the new requirements, which are less than three years away, it’s essential to start evaluating current warehouse management system (WMS) capabilities now to be best prepared for the near future. Since traceability in our food supply chain is essential to providing better service to our customers and end consumers, and a detailed record-keeping system is important for all the foods we handle in our food chain, making updates now will lead to a seamless transition when the new requirements become mandatory.

Key Data Elements and Critical Tracking Events

As part of the rule, those who manufacture, process, pack or hold foods on the Food Traceability List (FTL), must maintain and provide to their supply chain partners specific information — called Key Data Elements (KDEs) — for certain Critical Tracking Events (CTEs), in the food’s supply chain.

For example, if a distribution center (DC) receives the repacked fresh cucumbers from a produce processor, it must keep records on the receiving KDEs of the fresh cucumbers. Since the DC will be shipping the cucumbers to a retail store, it must maintain KDEs related to the shipping of the cucumbers to the next point in the supply chain, the retailer. The DC must also send the KDEs to the retailer.

Records must be kept regarding where the shipping event began and where it ended, meaning where the food was received. Still, the FDA said it is unnecessary to have records of the food's route, including any instances where it may have been moved from one carrier to another. Also, for cross-docking situations where food is arranged for transport from point A to point B but is briefly placed on a loading dock at point X at the DC to be transferred from one truck to another, records don’t need to be kept for point X.

Key Data Elements for those receiving food include:

  • Traceability lot code for the food
  • Quantity and unit of measure of the food
  • Product description for the food
  • Location description for the immediate previous source (other than a transporter) for the food
  • Location description for where the food was received
  • Date the food was received
  • Location description for the traceability lot code source or the traceability lot code source reference
  • Reference document type and reference document number

Key Data Elements (to maintain and provide) for those shipping food include:
  • Traceability lot code for the food
  • Quantity and unit of measure of the food
  • Product description for the food
  • Location description for the immediate subsequent recipient (other than a transporter) for the food
  • Location description for the location from which the food was shipped
  • Date the food was shipped
  • Location description for the traceability lot code source or the traceability lot code source reference
  • Reference document type and reference document number (maintain only)

Traceability Plan

All parties covered by the rule must create a traceability plan, and several are specific to those holding the food, such as a DC. The plan must include a description of the procedures used to maintain the required records, including the format and location of the records. It also needs to have a description of the procedures used to identify foods on the FTL and a statement identifying a point of contact for questions regarding the traceability plan and records. Traceability plans must be updated as needed to ensure the information reflects current practices and previous traceability plans must be maintained for two years after an update.

The Importance of Equipment, Technology and Training

There are several layers to the FSMA, which was signed into law in early 2011, and several requirements apply to the transportation and storing of food. All parties in the supply chain need to ensure they’re complying with current requirements and prepared to meet upcoming compliance dates.

FSMA includes requirements surrounding vehicles and transportation equipment, which must be “adequately cleanable” to allow the sanitary transport of food and “must be stored in a manner that prevents harborage of pests or becoming contaminated in any other manner that could result in food becoming adulterated.”

The ability to track and trace products is at the heart of several requirements, making the right WMS a vital resource. Tier 1 systems provide information on where products are stored and have embedded algorithms that can find ways to maximize productivity and the movement of product in and out of the warehouse.

It is also important for those transporting and storing food to be current on the latest requirements and best practices. Penske Logistics has earned Cold Carrier Certification, adding to its strategic approach to safety. The certification, which is the first of its kind, recognizes cold trucking carrier companies that comply with the Refrigerated Transportation Best Practices Guide from the Global Cold Chain Alliance, a trade association representing all major industries engaged in temperature-controlled logistics. Additionally, Penske associates undergo regular training to ensure food safety.

Foods on the Traceability List

Foods that will be subject to greater requirements in 2026 include:

  • Cheeses, other than hard cheeses
  • Shell eggs
  • Nut butters
  • Cucumbers
  • Herbs (fresh)
  • Leafy greens (fresh and fresh cut)
  • Melons
  • Peppers
  • Sprouts
  • Tomatoes
  • Tropical tree fruits
  • Fruits (fresh cut)
  • Vegetables (fresh cut)
  • Finfish
  • Smoked finfish
  • Crustaceans
  • Molluscan shellfish, bivalves
  • Ready-to-eat salads

Learn more at:

https://www.fda.gov/food/food-safety-modernization-act-fsma/food-traceability-list

Effective supply chains require agility, and freight brokerage offers the flexibility shippers need as they respond to market changes, surges in demand, and planned or unplanned growth. Supplementing existing transportation modes or lanes is common for shippers, especially with the supply chain challenges we face today, and brokers can help find additional capacity when it’s needed.

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The supply chain continues to deal with ongoing disruptions, which have become increasingly numerous, larger in scale and more simultaneous. While technology plays a critical role in keeping products moving, 3PLs and shippers can’t overlook the value of getting back to basics and focusing on core supply chain principles that have proven successful time and time again.

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Freight Management FAQs

What is freight management?

A: Freight management is the process of efficiently and strategically moving freight across a network from its point of origin to its desired destination using various modes of transportation, intermediaries, and technologies. The process employs logistics and supply chain expertise, physical assets such as trucks, distribution centers and warehouses, and technology to move freight efficiently and cost-effectively.

Why has freight management become such an important component of business?

A: The ability to deliver freight on time to the right destination, in the right quantity, damage-free, and at the lowest possible cost, has always been critically important to businesses. In today’s competitive environment, this ability is more important than ever due to factors such as leaner shipper inventories, just-in-time manufacturing, rising warehousing and labor costs, tighter delivery windows, and consumer fulfillment expectations driven by ecommerce.

What modes of transportation do freight managers use?

A: Freight mangers ship cargo by air, rail, road, and water. Combinations of these modes, often referred to as intermodal transportation, are also used to provide optimal logistics and delivery solutions. Within the United States, roughly 70% of freight is transported by commercial trucks.

What are the different road transportation options?

A: Ground transportation comes in many varieties but common choices for shippers are full truckload (TL or sometimes FL), less-than-truckload (LTL), and parcel. In TL transportation a shipment fills an entire semi-truck trailer, whereas LTL shipments only partially fill a semi-trailer and can be comingled with other various other appropriate freight to make up a full load. Parcel refers to the transportation of small and mid-size package units. Each option requires a different freight management approach.

What are the different freight management options via truck?

A: The three primary freight management options by truck are: private carriage, common carriage, and dedicated contract carriage. Shippers that choose private carriage elect to manage their own trucks and drivers. In common carriage, freight is moved by multiple third-party trucking carriers on an as-needed and transactional basis. Dedicated contract carriage (DCC) — an increasingly popular method — provides the same fixed capacity and control as private carriage but shippers fully outsource the operation and management of their fleet to a third-party logistics provider (3PL) or lead logistics providers (LLP). In the instance of DCC, the 3PL operates and maintains the truck fleet, hires and manages the drivers, and ensures the safe, on-time delivery per the shipper’s requirements.

Visibility is a common supply chain term. What is it?

A: Supply chain visibility is essentially the ability to track the status and location of parts, components, and products as they move from origin to destination. It’s difficult to overstate the importance of supply chain visibility. It underpins excellent customer service and enables companies to drive cost out of supply chains by, for example, anticipating and avoiding operational disruptions.

Transparency is another widely used supply chain term. What is it, and how does it differ from visibility?

A: While visibility covers the monitoring of units flowing through supply chains, transparency refers to how companies share their freight information with other trading partners in the supply chain. This may include manufacturers, distributors, trucking carriers, 3PLs, upstream and downstream suppliers, freight brokers, freight forwarders, regulators, or even customers themselves. The concept of transparency within the supply chain ensures the smooth, efficient hand-offs and shared knowledge of everyone working within a logistics network. Transparency has become especially important in consumer-facing industries such as retail, CPG or food where shipping has become ever more complex, and customers are demanding more information into the products they buy. The evolution of trends like blockchain are clear evidence of a greater desire for transparency.

How can a shipper maintain high levels of visibility and transparency?

A: Technology is a critical piece of the visibility and transparency puzzle. 3PLs and LLPs use tools such as transportation management systems to track and trace the movement of freight and disseminate this information to authorized parties as quickly as possible. Leading 3PLs and LLPs also use advanced tools such as artificial intelligence to spot anomalies in freight networks and notify shippers of potential disruptions or delays.

What is a transportation management system (TMS)?

A: A transportation management system (TMS) is a platform for managing freight and freight flows. One of the most important tools in the logistics toolbox, TMS technology has evolved rapidly over the last decade. Modern systems support day-to-day freight operations as well as strategic decision-making through advanced analytics.

How is Internet of Things technology applied in freight management?

A: Internet of Things (IoT) is the term used to describe technology that connects everyday objects to the internet via sensing devices. Products and components moving through supply chains as well as assets such as trucks can be tracked using IoT-based sensing systems. These systems provide companies with real-time or near real-time location data and status updates such as the temperature of loads.

What is a routing guide?

A: A routing guide is a guide to which carrier or carriers a company chooses to move its freight. Routing guides come in many forms, but generally include preferred carriers that align with the shipper’s logistics needs.

What is a spot market rate in trucking?

A: Spot market rates are one-off rates quoted by truck carriers to haul a particular load or loads. Unlike contract freight rates which are fixed according to a pre-negotiated agreement between shipper and carrier, spot market rates fluctuate. Using the spot market to move freight is usually the more expensive option. Maintaining comprehensive routing guides is one way to lessen a shipper’s dependence on the spot market.

What are accessorials?

A: Freight accessorial charges are charges incurred outside of regular load pickup and delivery activities. Examples include fees for packing or unpacking cargo or a charge imposed by a carrier for unplanned delays at a loading dock. These extra fees can significantly inflate logistics costs.

What is a preferred shipper?

A: Trucking companies generally prefer to do business with companies that are efficient, financially sound, and highly collaborative — commonly called preferred shippers. The accolade translates into a competitive advantage. For example, a preferred shipper is more likely to find carriers to haul its freight during periods when carrying capacity is in short supply. There are various ways to become a preferred shipper. One is to keep loading/unloading delays to a minimum (see accessorials above).

How can a freight management partner save time and money for shipper clients?

A: There are numerous ways in which freight management partners deliver significant time and cost savings. For example, leading 3PLs and LLPs help shippers to negotiate the most competitive freight rates to minimize costly supply chain disruptions, and to ensure that freight networks run to maximum efficiency.

What should I look for when choosing a freight management partner?

A: It is vitally important that shippers choose a freight management partner that has the right level of logistics expertise and is compatible both culturally and organizationally. Here are some notable red flags:

  • Does the 3PL / LLP have a long and successful track record of managing different types of freight?
  • How responsive is the 3PL / LLP to market changes and trends as well as supply chain disruptions?
  • What resources does the 3PL / LLP offer in terms of infrastructure, technology, and personnel?
  • Does the 3PL / LLP have a strong presence in multiple industries? Cross-industry expertise is extremely important in today’s highly competitive logistics market.
  • Is the 3PL / LLP an innovator in terms of the logistics solutions it has implemented and the technology it deploys?
  • Can the 3PL / LLP show that it is ahead of the technology curve?
  • Is the 3PL / LLP financially sound and well-insured?
  • Does the 3PL / LLP have a strong reputation and brand in the marketplace?

As one of the top-ranked third-party logistics provider (3PL) and one of the industry’s original lead logistics providers (LLPs), Penske's team draws upon 50 years of experience helping market-leading shippers succeed with safe, on-time and efficient deliveries. Our freight management specialists create customized freight management plans to best meet the specific needs of your business — whether that is improving service levels, driving down costs, enhancing operational performance and driving change, or some combination of these common needs.

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