Spot vs. Contract Rates: Don’t Be Fooled by Short-Term Declines

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fwtv-note{font-style:italic;color:#666;margin-top:16px;padding-top:12px;border-top:1px solid #e0e0e0}The gap between spot and contract freight rates is widening, with contract rates up almost 20% year-over-year while spot rates see a monthly dip. Dive into SONAR data to understand why this isn’t just seasonal softening.

We’ll explore the strategic shift to intermodal in key markets like Indianapolis and what it means for your procurement teams. Van contract rates have climbed 19. 3% year over year while NTI spot rates have dipped roughly 5% month over month — a divergence that FreightWaves’ Craig Fuller says procurement teams should not mistake for a softening market.

Fuller, presenting the SONAR Update on Tuesday, Aug. 12, warned that the spot decline reflects some seasonal softening but more significantly signals that carriers and brokers are pricing forward risk into committed rates as new mini-bids and contract renewals roll in. “Don’t get fooled by the short-term spot bit of decline,” Fuller said.

“The contract rates rising is a huge part of that.” He added that procurement teams need to keep benchmarking against contract rates and prepare for the continued double-digit increases that major carriers have flagged in recent earnings calls. Modal conversion is emerging as the market’s leading indicator, Fuller said.

Truckload tender volumes are down about 2% overall, yet intermodal container volumes are up 2% in the same window — a simultaneous shift that points to deliberate shipper strategy rather than demand destruction. The 32% cost spread between intermodal and truckload rates is a primary driver, according to Zach Strickland.

“The fact that you see a 32% spread on the cost is — you can’t ignore it,” Strickland said. Intermodal growth is concentrated in an unexpected geography.

While Los Angeles volumes are up year over year, Atlanta and Chicago are posting significantly larger growth rates, suggesting the capacity crunch is pushing freight onto eastern rail corridors more than traditional west-coast import lanes, Julie Van de Kamp noted.

She pointed to BNSF’s strong recent earnings and JB Hunt’s commentary as confirmation that rail is capturing meaningful share from truckload. Van de Kamp and Strickland also emphasized that the intermodal shift may be structural rather than cyclical.

Large intermodal providers have told FreightWaves that shippers who had never used intermodal are now trying it and staying. “It’s sticky. It’s very sticky, ’cause it’s not like somebody’s gonna just pull that infrastructure right back off,” Strickland said. Indianapolis offers a case study in why headline numbers can mislead.

Van rejection rates in the market have eased modestly, but the HAL Index remains above 90 and Indianapolis registers deep blue on the SONAR map — well above the national average.

Reefer rejections in the market are actually still rising, reflecting the city’s heavy concentration of grocery, refrigerated, frozen, and fulfillment operations, including major Amazon and FedEx facilities. Spot rates out of Indianapolis continue to increase. “From everything I can see, Indy is still quite hot,” Fuller said. Van contract rates are up 19.

3% year over year even as NTI spot rates fall ~5% month over month, a gap carriers and brokers are pricing with forward risk in mind. Intermodal container volumes are up 2% while truckload tender volumes are down 2%, driven by a 32% cost advantage that industry participants say is creating sticky, long-term modal shifts.

Indianapolis’s HAL Index remains above 90 and reefer rejections are still rising despite a modest dip in van rejections, underscoring the need for market-level context beyond headline data. This Summary is generated thanks to a transcription of the interview, for the full interview please enjoy the video above. The post Spot vs.

Contract Rates: Don’t Be Fooled by Short-Term Declines appeared first on FreightWaves.