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When a shipper urgently needs truckload service, they often utilize the spot market. But despite its importance, little is known about this market. I analyze a longitudinal data set of auctions for spot truckload service where I observe invitations for carriers to bid, whether a bid is placed, and the bid price if one is placed, and augment this with information about the bidding carriers. Drawing upon auction theory, I suggest that a carrier's a priori characteristics (size, market specialization) explain the two primary decisions made in the auctions—whether to bid and how much to bid. I find that brokers, who act as intermediaries between shippers and asset‐based carriers, bid much more frequently and higher than asset‐based carriers. Price indexes show that broker bid prices follow similar patterns, but asset‐based carrier prices do not. The results suggest that an online marketplace linking shippers directly with the thousands of asset‐based carriers could add considerable value to the for‐hire trucking industry, a development which appears to be happening.
Alex Scott (Tue,) studied this question.