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Freight Bid Tip # 6 - Meet Face-to-Face with Potential Carriers and Perform Due Diligence

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We live in an era of impersonal communication. E mails, text messages, tweets and GoToMeetings have replaced face to face communication in many instances.

The decision to award millions or tens of millions of dollars in freight transportation to a set of carriers is a very important one. You don’t want to entrust your company’s business and reputation to poor service providers that say they will meet your needs and don’t deliver. You don’t want to commit your business to carriers that offer low pricing to secure the contract and then come back a few weeks later with a rate increase, claiming they misunderstood the bid. These situations happen all too often and they can be very disruptive and financially punitive to shippers.

It is our view that the bid evaluation and award process cannot be done effectively through automated computer programs. There is a requirement to meet “eyeball to eyeball” with companies that may be your future business partners. These meetings should have a formal agenda. In addition to pricing issues, there is value in reviewing the carriers’ operations in detail. This includes:

a) fleet size and age

b) key lanes of traffic, head haul and backhaul

c) safety ratings

d) customer service operations

e) information systems

f) warehousing capabilities

g) weekend and off-hours services

h) financial situation (e.g. Operating Ratio) and

i) value-added services.

Also, don’t overlook the obvious. Who does the trucking company send to meet with you, how are they dressed and how well are they able to explain the services they offer? Does the company send a sales person or is this person accompanied by a terminal manager or director of operations who truly understands the details of the business and can make commitments based on personal knowledge?

Use these meetings to communicate exactly what you expect from your carriers. Take the time to refresh the information on your incumbent carriers and evaluate prospective new ones. If your company embarks on a freight bid project, don’t rush this important step.

 

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill or join the Freight Management Best Practices group on LinkedIn or subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).

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