How shippers should manage their bids

img

Transportation bids, which are sometimes called requests for proposal/pricing (RFP) or requests for quotation (RFQ), are requests from shippers to transportation service providers such as carriers or third-party logistics companies (3PL/brokers) to provide prices and service standards for transporting goods. This process can be extremely time-consuming and difficult to manage – especially since transportation management is not the main focus of the requesting company’s business. Here are a few tips to help make this process as smooth as possible.

Target your providers carefully

This should go without saying, but many companies simply spam a number of carriers and 3PLs with potential bids without doing much research on the companies and what they do. Many carriers have specialties, meaning they focus on transporting a specific type of good or delivering to certain customer types. For example, a shipper that ships perishable goods should not request a proposal – or hire – a carrier that transports mostly hazardous materials. Avoid sending bids out to too many providers; this makes the process cumbersome and some will not put as much effort into the bid knowing they have little chance of winning. Selecting a choice few at the beginning of the process should provide the right level of competition while keeping the process manageable.

Size matters

Shippers should also check the size of the companies with whom they decide to partner. Carriers with only a few trucks will not be able to handle large volumes. Figuring out how much capacity you need at your busiest time of year will allow you to target the right size carrier(s) to handle your demand, understanding they will have other customers as well. 

Financial strength

Financial health matters. The cheapest carrier is not always the best option. A carrier may give you the cheapest rates because it is struggling financially, and in a few months you will have to find another provider if it goes out of business. A carrier that is struggling financially could have a struggling operation, which leads to inconsistent service and other relational issues. Ask for basic numbers like operating and debt to asset ratios. A carrier does not have to provide these figures, but the healthy entities will be more willing. 

3PL or direct-to-carrier

The first question you need to ask yourself when considering a logistics provider that owns no trucks or assets compared to going directly to a carrier is how comfortable are you making all of the above evaluations in terms of size, financial health and understanding your specific needs. If your company does not have a transportation manager position, that is probably your first sign you need to consider a 3PL to take on the responsibility of managing your transportation. You will pay more for this service, but it may be worth it to save overhead costs and the problems that can come with choosing the wrong carrier. On the other hand, partnering with a carrier and developing a strong relationship will provide the most control and lowest cost over time if managed correctly. 

Timing

Pick the right time if you can help it. For most years this means having carriers bid during their least busy time. Pricing departments get overwhelmed with bids in the fall, but capacity tends to be tightest in the spring. January is traditionally the slowest month for freight and subsequently the loosest in terms of capacity. If your bid process is longer, send it out in December with a deadline in January. The back office is less stressed and general market demand is soft, making this the ideal time for evaluation for a carrier or 3PL. Budgets may not allow for this, however, so knowing general freight market conditions can help you time your bids for optimal prices.

Provide clean and accurate information

Once you have decided on which companies you are targeting, you will need to provide the candidates with the pertinent information and right level of detail. Put all your information in a clean and legible format, which will generate the fewest questions from the providers. The main questions you should answer are:

  • How much are you shipping? (i.e. how many truckloads per week/for less-than-truckload, provide size/pieces and weight)
  • When/how often are you shipping? (annual volumes by week or month)
  • Where is it shipping from and where is it going? (origin and destination 5-digit zip codes are preferable to avoid any potential issues)
  • What are you shipping? (i.e. does the freight need any special handling or consideration?)

The more accurate and detailed you are with this information, the more accurate the bid will be. Once chosen, the better your relationship will be with your provider, which will lower problems throughout the year. Carriers and 3PLs alike take management difficulty into consideration each year when bids typically renew. This will keep costs lower and help you avoid any potential mid-cycle problems.

Additional services

Make sure you communicate any additional services in your bid package. Some examples are:

  • Temperature control
  • Liftgate
  • Lumper/driver assist unload
  • Expedited delivery 

Even if there are minimal amounts of any special services, knowing there is the potential for them will help your provider be upfront on what it can provide (because it may not offer some or all of those services). 

Selecting your provider

If you choose to use a 3PL, you do not have to make this decision, because it will take all of your information and manage the process at this point. If you choose to deal directly with a carrier, you now need to begin the selection process. Many shippers have multi-stage bids during which carriers submit rates and service standards. This can drag the process out longer, but can put downward pressure on rates in each subsequent stage. Lower volume shippers should keep things as simple as possible because this potentially damages the relationship with the carrier (by making the process longer and forcing the carrier to push rates even lower than it wants). 

Most of the selection should have already been made in the screening process outlined above. At this point, it is about deciding how many carriers you need and which one(s) you think will provide the best service at a desired rate. Any carrier can put price and service on paper in January, but leave you wanting in June. Pick a provider that you think has a strong understanding of your needs and general market conditions. If a carrier is offering you 20% lower rates in a time when the market is booming, take that as a red flag. 

Due diligence on the front-end and solid communication will make this process smoother and more fruitful. 

Good luck and happy bidding. 

Source: freightwaves.com

Strategic Partners

https://doc.g7logisticsnetworks.com/testimonial/logo__11159__Intro Hiyana.jpg
It is wonderful and amazing to be a member of G7N with a very good exposure to the worldwide logistics players. G7N Conference is a great way to get exposure, and we got to meet a lot of other members, and develop business relationships. It is incredible and very exciting to be a part of your valuable network.
https://doc.g7logisticsnetworks.com/testimonial/logo__sobel.png
Sobel Network Shipping Company has had the pleasure and privilege of being a part of the G7 Network for a few years. The G7 Network has had a reputation of being very well managed by an excellent team. Membership to the G7 Network is very exclusive with a small group of companies that are well connected and trustworthy, creating lifelong friendships even beyond the scope of work. Through these connections and networking, the G7 Network has provided some very lucrative opportunities for Sobel Network Shipping. We look forward to being a part of the G7 Network family for many years to come.
https://doc.g7logisticsnetworks.com/testimonial/logo__Woodland_logo.jpg
G7N continues to be an amazing network for developing business partners and key relationships globally. Being such a dynamic operation, communication remains very prompt at all hours over a wide variety of channels, creating a friendly and vibrant atmosphere between all members. The knowledge base within the G7N Team themselves remains astounding and would certainly recommend them as first port of call.
https://doc.g7logisticsnetworks.com/testimonial/logo__11098__tec-200x67.jpg
As founding member of G7N we wish to point out that we are extremely happy to be part of the group which has been growing constantly in the last few years in spite of the challenges coming from COVID 19 emergency which is causing unprecedented troubles to all of us, in our business and personal lives. G7N management succeeded in passing through this “crazy” time with lucidity in mind and with the right measures to keep members tied and constantly in touch.
https://doc.g7logisticsnetworks.com/testimonial/logo__jm_logistic.png
The concept and environment G7N team created for the conference and the Cargo Weekend is awesome, it allows you to build a friendship that is the base of strong business relationships. I hope I can keep being part of this family and meet all my new friends in the conference to come representing JM Logistics.
https://doc.g7logisticsnetworks.com/testimonial/logo__3k_logo.jpeg
Being a proactive and professionally managed network with its productive members and overnight replies to all inquiries together with providing a sense of confidence with its financial protection system, we as 3K Logistics, Turkey are very much delighted & glad to be a member of this valuable family.
https://doc.g7logisticsnetworks.com/testimonial/logo__marinair_logo.jpeg
Having recently joined the G7N Logistics Network, I must say the team behind the scenes make every effort possible in ensuring partners are well connected with each other no matter the nature of the consignment. The network does a fantastic job is ensuring that all members despite their geographical locations feel part of one family!
https://doc.g7logisticsnetworks.com/testimonial/logo__logo__Owakhe.jpeg
Thus far, Owakhe has been seeing potential in the group and we look forward for another exciting year ahead.
https://doc.g7logisticsnetworks.com/testimonial/logo__cargo_movers.png
The conference and members are awesome and the interactive atmosphere is particularly impressive! Never seen such a difference in networking and opportunities for everyone! You can feel the professionalism, experience and the energy of the network!
https://doc.g7logisticsnetworks.com/testimonial/logo__windfreight.png
Yes we really do enjoy our G7N conference. For the last 23 years that I’ve been attending network conferences this one is really special and cool. Members are so friendly you will really feel that we treat each other as family. We feel found a family with G7N.
7:53

NEW YORK

7:53

sao paulo

7:53

london

7:53

dubai

7:53

bangkok

7:53

hong kong

7:53

tokyo

7:53

sydney

Networks News

img

Megagon Proje ve Denizcilik Ltd. Sti. Major Cargo Shipments from Netherlands and Yalova Set to Drive Global Trade Growth

img

Leb Freight SAL Ensures Cargo Security and Compliance from Beirut to Doha

img

Cargo Movers Successfully Delivers Vital Medical Supplies to Libya

img

BRX Cargo Celebrates 12 years as an International Logistics Company

Are you ready for a collaboration
that will boost your business

Let’s Work Together