Spot Rates Run 40% to 70% Above Contract on Infrequent Lanes

Why are spot rates so much higher than contract rates right now?

Spot freight rates are running 40% to 70% above contracted lane rates in the current market, according to Brian Riley, VP of National Account Sales at RXO. Riley made the remarks during a FreightWaves interview at the Univar Solutions Carrier Kickoff Event in Chattanooga, Tennessee, where roughly 60 to 70 carriers gathered for an annual supplier conference.

The core problem is that contract awards on infrequent lanes have become effectively unenforceable. A rate locked in October on a lane that ships only once over six months carries almost no chance of being honored when a truck is finally needed. "Spot was a slight premium. Now acceptance being lower, spot is 40%, 50%, 60%, sometimes 70% higher than what you thought your contract rate was going to be," Riley said. "But it's a paper rate that's never going to be honored."

For small fleets, this creates a tiebreaker problem. When capacity is tight and multiple brokers are calling for the same lane, the carrier with a standing contract relationship should theoretically get first crack. But if the contract rate is 50% below spot, that relationship evaporates. The shipper pays spot anyway, and the carrier who honored a different broker's higher bid gets the load.

Which lanes are breaking down first

Riley said the "tail" of small, infrequent shipments (lanes moving fewer than 5 to 20 times per year) has grown longer and is now the primary stress point in shipper networks. His recommended fix: move away from a single high-volume primary award paired with a tail of marginal lanes, and instead restructure into multiple primary awards with adjusted percent allocations across carriers.

Shippers clinging to traditional waterfall routing guides risk paying the steepest price. A waterfall model assumes the first-awarded carrier will cover the load at the contract rate, then cascades to a second and third option if the primary declines. That worked when spot was a 5% to 10% premium over contract. It breaks when spot is 40% to 70% higher.

Riley also pointed to proactive rate increases as a tool some shippers are already using. Customers who voluntarily offered contract increases to offset rising rejections and spot exposure were able to secure greater carrier commitment. He was direct that the move carries a firm service expectation in return. "That carries a big expectation of service though. Don't pay me 10% more and expect me to not" honor the load, he said.

What RXO is doing to lock capacity

On the technology side, Riley highlighted RXO's investment in automated spot processes, including indexed or cost-plus models and staging dedicated power-only equipment on customer yards exclusively for spot coverage. The goal is to remove the manual coordination step when a contract load gets rejected and immediately hits the spot board.

Riley also credited the 2023 Coyote acquisition with expanding RXO's carrier network into industries and markets where the two companies had limited prior overlap. That provides both consistent coverage and surge capacity when a shipper's primary carriers are tapped out.

Riley described RXO's carrier retention strategy as centering on the RXO Extra program, which offers drivers fuel discounts, tire benefits, and maintenance support. He said the programs are especially impactful for smaller carriers facing soaring fuel costs. The goal is straightforward: give carriers a concrete reason to prioritize RXO freight when capacity is tight and tiebreakers matter.

"Win the tiebreak" is the internal framework Riley uses when coaching his team. If price and service metrics are equal among a room of 60 to 70 providers, relationship and reliability determine who gets the load. For a small fleet, that means the broker who answers the phone in both good times and bad, and the shipper who doesn't constantly search for a lower cost at the expense of service, are the ones who get the truck when you have one available.

What this means for a 5-truck fleet

If you run a small fleet and you're seeing contract tenders at rates 40% to 70% below what you can get on the spot board, the math is simple: you're going to take the spot load. The shipper who locked that contract rate six months ago is going to pay spot anyway when their primary carrier declines.

But Riley's point about proactive rate increases is worth watching. If a shipper calls and offers a 10% bump on a contract lane before you reject it, that's a signal they're trying to preserve the relationship. It's still below spot, but it's also a commitment that the rate won't stay frozen while the market runs away from it. That's the kind of shipper who might be worth prioritizing when you have a truck available and three brokers are calling.

The flip side: if you're running lanes that only move 5 to 20 times a year, don't expect the contract rate to hold. Plan for spot pricing on those loads, and budget accordingly. The "paper rate" Riley described is exactly that: a number on a contract that won't show up in your settlement statement.

Riley also flagged an upcoming RXO quarterly state-of-industry webinar scheduled for August 25, to be led by Chief Strategy Officer Jared Weisfeld and Corey Klujsza. The session will feature the RXO Curve along with market forecasts and projections. Shippers with routing guide failures can access capacity resources at rxo.com/capacity.