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What is Contract Freight (and is it Right for You)?

Curious about what contract freight is and how to get it? Our guide breaks down everything you need to know about it so you can make an informed decision on whether it's

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Josh Kimble
February 21, 2022
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When it comes to trucking jobs, you won’t find one much better or more stable than a long-term gig hauling contract freight. Crawling load boards and managing never-ending rate fluctuations can be tiring and stressful. Finding a dedicated trucking lane to haul contract freight puts an end to those worries.

Contract freight is an agreement between a shipper and a carrier to move truckload shipments across a specific lane at a fixed rate over a set period of time. Contract freight can be moved by either carrier fleet or by owner-operators. It offers long-term, stable pricing, regardless of market trends.

There’s a lot to consider when deciding whether or not to haul contract freight. Keep reading to learn more, including advantages and disadvantages, how it compares to spot freight shipping, and how you can find contract freight jobs.

What is Contract Freight?

Contract freight, also known as dedicated freight, guarantees a certain amount of volume to a carrier and a certain amount of capacity to a shipper. The freight is often consistent over the length of the contract and it’s always moved over a set lane at a set rate. More often than not, contract freight is moved regionally, meaning it’s generally not conducive to long-haul or OTR trucking.

What is a Contract Rate?

A contract rate is a set price that a shipper, broker and carrier agree on to move dedicated freight in a specific lane over a specific period of time (typically one year). Contract rates provide long-term stability and are typically calculated based on a number of factors, including:  

  • The particular type of freight that needs to be hauled
  • The expected volume of that freight
  • The length of the freight contract
  • The number of miles the carrier is expected to travel 
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What’s the Difference Between Contract Rates and Spot Rates?

Unlike contract rates, which are long-term agreements with stable pricing, spot rates are dynamic, short-term, and entirely dependent on current market conditions. A shipper will typically provide a spot rate, or spot quote, under the following circumstances: 

  1. The shipper has a higher volume than their current carriers can handle
  2. The shipper has too little volume to justify a contract
  3. The shipper has an unexpected, urgent shipment that needs to be delivered

Spot rates are based on one-time shipments, not on entire lanes or for multiple transactions. They fluctuate frequently based on the current supply and demand in the freight market. During peak season and the holidays, when more freight needs to be moved and the supply chain is stretched thin, rates skyrocket. When the slow season hits and demand is low, spot rates drop.

Spot and contract rates are generally considered to be the opposite of each other, but one can also have an impact on the other. If spot rates are particularly high or low and seem to have some staying power, it will likely impact contract rate negotiations that are being made around that same time. 

What are the Pros and Cons of Contract Freight?

A road sign that says Pros and Cons with arrows pointing in opposite directions.

Anytime you sign a contract, there are pros and cons you have to weigh beforehand, and hauling contract freight is no different. Once a carrier signs a contract, they’re locked into whatever length of time, rate, or lane that they agree upon. It’s important to consider all factors before signing on the dotted line.

PRO: Rate Stability

Not only do contract freight rates mean that your volume and pay are guaranteed, it means that your payment isn’t subject to the ever-present fluctuations of the freight market. Whether or not the demand for truckload takes a nosedive or the rate for freight drops due to seasonal slowdowns, you’ll still be getting paid a stable market rate.

PRO: Job Security

Similar to rate stability, hauling contract freight ensures that you have a job for the length of the contract. With contract freight, a certain amount of freight volume is guaranteed to the carrier, meaning that even if the freight market hits an unexpected downturn or demand drops, you’re not stuck without work or looking for scraps on the load boards. 

PRO: Schedule Stability

Contract freight comes with a certain amount of certainty, hauling the same freight on the same lanes during the same days each week. As a result, it provides stability to your work schedule. In a job hauling contract freight, you’ll know exactly what’s expected of you each day, how long you’ll be on the road, and when you get to come home throughout the week.

CON: You Miss Out on High-Value Loads

While being paid a stable rate is nice and certainly less stressful than the alternative, it can also be tough to watch spot rates skyrocket without being able to capitalize on them. However, it’s worth remembering that spot rates fluctuate frequently, and trying to chase them throughout the year can be exhausting.

CON: No Variety

If you’re one who believes that variety is the spice of life, a job hauling contract freight might not be for you. You’ll likely be driving the same route, seeing the same people at the same time each week. While having stability in your lane and schedule can be comforting, doing the same routine every day can lead to burnout.

CON: Lack of Freedom

One of the perks of long-haul trucking is that drivers are able to explore different parts of the country or pick up additional jobs and backhaul loads. In contract freight, your route and loads are consistent, meaning you don’t get true OTR experience or the ability to seek new opportunities.

Whether you’re weighing the risks and rewards of contract vs spot rates, or considering how to balance a stable schedule with a dull routine, there is a lot to consider when deciding whether or not contract freight is right for you. Make sure you weigh all options to find a trucking job that fits your needs.

How Do You Find Contract Freight?

A close-up view of the front of a semi-truck.
  1. Find a Freight Broker

Freight brokers are one of the best options available to carriers for help finding a dedicated shipper. A freight broker acts as a middle man between shippers and carriers. They can help match up shippers and carriers that meet the other’s needs. Getting in touch with a freight broker is one of the quickest ways to be directly connected with a shipper that’s right for you.

  1. Search Load Boards

Load boards are typically used for isolated shipments and for patrolling the spot market. They can also be a great tool for connecting you with shippers. If your goal is to sign a long-term freight contract, finding loads and building contacts with shippers may allow you to leverage a haul into a dedicated freight job. 

  1. Hire a Dispatcher

Like with load boards, you won’t find long-term freight contracts just by hiring a dispatcher, but you can find jobs that connect you directly with shippers and can help you build a network. The more relationships you can build with industry contacts, the higher likelihood you have of finding contract freight.

  1. Government Contractors

Private sector companies aren’t the only entities out there hauling freight. Another option for finding dedicated freight is to connect with a government contractor. You can find contractors registered with government agencies at the federal, state and even local level. Government contracts aren’t always easy to come by, but they can be lucrative once you do.

  1. Become a Company Driver

By far the most stable way to haul freight is to get hired by a trucking company, such as ABCO Transportation. Trucking companies offer a variety of routes and trucking jobs. If you’re looking for a dedicated trucking job where you can haul the same freight, on the same lanes, with a stable schedule, driving for ABCO is the move you.

Find a Dedicated Freight Job with ABCO

If you’re a truck driver looking to make a change, ABCO Transportation can offer you opportunities no matter where in the country you’re located. ABCO combines competitive pay with industry-leading benefits to help you find a job that meets your driving needs. Fill out our application or search for a trucking job to find a new job with ABCO Transportation today.

Looking for competitive pay and amazing benefits?
You've found the right company! Join our awesome team today to upgrade your benefits and pay.
Apply Now  >

You've Got This!

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