Spot-contract gap collapses to near four-year low

Chart of the Week:  Spot (linehaul) to contract rate spread (fuel base at $1.20/gal) SONAR: NTIL12.USA

The spread between dry van truckload spot rates and contract rates shrank at its fastest pace since the onset of COVID this past December, offering a clear signal of the trucking market’s growing fragility.

The spot-to-contract spread is defined as contract rates (excluding fuel surcharge) minus the spot rate equivalent, with fuel surcharge removed from both. Contract rates—longer-term agreements—have averaged well above spot rates since early 2022, with the gap narrowing only gradually as capacity has rebalanced.

One reason spot rates typically trade below contract rates is the structure of the brokerage-driven spot market. Freight brokerages thrive on identifying carriers that are less visible to shippers and can operate at lower costs. Their success depends on sourcing capacity below prevailing market averages.

As a result, brokers often target smaller carriers with lower overhead or carriers whose network imbalances run counter to broader market conditions. In a loose market—when capacity exceeds demand—spot rates tend to form the market floor because they are the most heavily negotiated. This relationship reverses when capacity tightens, as it did during the holidays.

Spot rates are also transactional by nature and short-lived. Carriers can accept lower rates in one-off situations where all variables are known, far more easily than committing to year-long pricing amid changing conditions. Contract rates, typically negotiated on a 12-month cycle, must account for future market risk and network uncertainty. As a result, they are much slower to adjust due to lengthy negotiation and evaluation processes.

When the truckload market tightens, spot rates usually rise above contract rates. Available capacity falls short of demand, forcing shippers and 3PLs to compete for trucks. This competition quickly drives up transactional rates, while contract pricing becomes less relevant—often leading to rising tender rejection rates.

When the market collapsed in 2022, contract rates were at all-time highs, averaging roughly 30% above spot rates. That spread widened to nearly 40% by spring 2023 before beginning a slow contraction.

By mid-November of last year, the spread had narrowed to approximately 15–20%. By Christmas, the aggregate spot rate index was just 1% below the contract rate index—its lowest reading since March 4, 2022.

For context, the spread fell from roughly 18% in early 2024 to about 8% later in the year. In 2023, it declined from 35% in November to around 25% during the holiday period.

Spot rates are now rising relative to contract rates and becoming increasingly responsive. The holiday surge suggests rates are behaving like a coiled spring, as carriers—after years of playing defense simply to stay afloat—have kept pricing lower than sustainable. Spot rates lead the contract market and this trend puts contract rates’ stability into question in the coming year.

The trucking market resembles a group of people standing on a melting iceberg, waiting for the next ice age. This latest spot rate surge shows just how thin the ice has become.

About the Chart of the Week

The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real time. Each week a Market Expert will post a chart, along with commentary, live on the front page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.

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