Guest blog from Johnny McCord, Founder of Loadsure
What is the spot freight market?
Let’s start by looking at the size of the North American freight transportation market.
$1.2 trillion USD industry
Roughly $700 billion of this is US motor carriers, hauling 11 billion tonnes of freight.
To put those numbers into perspective, that is four billion one hundred twenty-five million artic lorries. Nose to tail they would wrap around the earth 103 times!
Now this freight can be divided into 2 groups:
Contract Freight and Spot Market
Contract Freight makes up roughly 85% and is hauled on contracts arranged well in advance by the shippers, at pre-negotiated rates.
Spot Market Freight makes up the remaining 15%. Roughly 1 billion loads a year are listed on Load Boards and hauled by the Spot Market, at rates negotiated as and when the transportation is needed.
History of Load Boards and Electronic Freight Marketplaces
The Load Board originates from the 1970’s following the deregulation of the US trucking industry.
Independent truckers would leave hand-written notes on bulletin boards in truck stops, hoping to find a load to haul. These truck stop bulletin boards came to be known as Load Boards. Entrepreneurs at the time based representatives at major truck stops and set up telephone services, allowing truckers to call in to find work. With the introduction of the internet, these boards and services moved online – becoming the modern Load Board.
In the early 2010’s the Electronic Freight Marketplace started automating the Load Board process. Instead of shippers and brokers posting available loads and truckers searching them, the Marketplace used algorithms that captured individual preferences to make matches.
Now, the modern Marketplace provides value-added services such as serving as a rate negotiation platform, load tendering, load tracking, and freight payment settlement, promising an end-to-end transportation sourcing solution.
Most of the leading Freight Marketplaces today are startups, but the legacy Load Board companies are beginning to add Marketplace features to their platforms to compete and stay relevant.
Today, over 80% of spot freight travels without adequate insurance.
In North America that is about 800 million underinsured loads per year passing through load boards and digital freight marketplaces, representing over $80 billion in annual freight transactions.
If you have an insurance solution for a woefully underinsured market, the Gateway would love to hear from you. Contact us any time, for a confidential, no strings attached chat.