[Video] Understanding Algorithmically Defined Spot Rates in IQ Benchmark Broker

2 minute to read

Understanding Algorithmically Defined Spot Rates in IQ Benchmark Broker

What are Algorithmically Defined Spot rates?

Traditionally, spot and contract designations depend on how users label their data. However, not all systems reliably flag this information. To improve consistency, IQ Benchmark uses an algorithm to classify rates based on usage patterns instead of relying solely on customer tagging.

This approach ensures a more reliable benchmark view, regardless of how data is labeled in your TMS.

How the algorithm works

The algorithm reviews the rate (with or without fuel) for each lane, defined as a pair of five-digit ZIP codes and equipment type. It then classifies a rate as either spot or contract based on how frequently it's used:

• Spot Rate : A rate is considered spot if it has been used on fewer than 4 separate days across all submitted data.
• Contract Rate : A rate is classified as contract once it appears on 4 or more distinct days.

Note: The count is based on days, not number of loads. Ten loads at the same rate on one day count as one instance.

The classification can update over time. If a rate begins as spot and continues to be used across more days, the system will automatically reclassify it as contract, and historical data will adjust accordingly.

What you’ll see in the dashboard

• Consistent, flat rates over many weeks often indicate contract rates.
• Rates that vary frequently, especially when involving a mix of carriers, typically appear as spot.
• Lane tables in the dashboard can be used to identify low-performing lanes or spot lanes with high costs.

Strategic use cases

This algorithm supports more informed decision-making. For example, you can:

• Identify frequently used lanes that are still operating on spot rates and explore opportunities to move them to contract agreements.
• Understand where you might have leverage with carriers by offering repeating lane volume.
• Detect underperforming lanes in your contract network.

Additional insight: Lane Consistency

In addition to rate classification, iQ Benchmark also measures lane consistency — how often a particular lane is used over a 12-month period, regardless of rate. This metric helps uncover high-volume lanes that may benefit from long-term contracts or deeper carrier relationships.