A freight bid is not just a tool to negotiate competitive shipping rates; it is an opportunity to identify and assemble a group of supply chain partners, valued business partners, to strengthen a shipper’s business. These business partners interact with a shipper’s customers every day. Carriers with reliable service facilitate customer retention and revenue growth. Weak partners can result in customer dissatisfaction and revenue erosion. Shippers embarking on a freight bid owe it to themselves to effectively perform due diligence on existing, and any prospective, business partners.
To properly evaluate carriers, there is a requirement to administer a structured questionnaire. A carrier questionnaire should be included with the full set of documents that are distributed with each bid. The questionnaire should be designed to identify the key strengths and weaknesses of each bid participant. The responses to the questions allow shippers to focus on those companies that are best equipped to meet their needs. The questionnaire should include these topics:
1. Carrier Assets and Capabilities
- Head office location
- Tractors/trailers by type (e.g. dry, refrigerated etc.)
- Number of drivers
- Number and location of terminals
- Terminals are in secure locations
- Days and hours of operation
- Union/Non-union operation
- Expiry date of contract
- Licenses and authorities
This part of the questionnaire addresses the issue of whether the company has the physical and human assets and the infrastructure to service the business.
2. Services
- Small parcel, LTL, truckload, expedited etc.
- % of revenues derived from services that match the shippers’ requirements (e.g. refrigerated LTL)
- Geographic coverage
- Early morning/after hours service
- Weekend service
- Will dedicated customer service personnel be assigned to the shipper?
- Drop trailers
- Specialized equipment (Be specific)
This part of the questionnaire examines if the carrier’s range of services and geographic coverage are a match with the shipper’s customer and vendor requirements.
3. Performance Ratings
- Safety rating
- Operating Metrics (e.g. On-time service, claims ratio etc.)
- Financial metrics (e.g. Operating Ratio over last 5 years)
- Years in business
This responses to these questions help determine if the carrier runs a safe, efficient, profitable operation.
4. IT Capabilities
- Application of AI in the business
- Automated Transportation Management System
- Online track and trace
- EDI billing
- Online and exception reports
These questions allow a shipper to determine if this company is strong in the management of data and its fleet; it allows the shipper to assess whether this company will be easy to work with or if manual follow up may be required on an ongoing basis.
5. Energy Efficiency Programs
- Participation in SmartWay/FleetSmart programs
- Electric vehicles
- ELD utilization
We live in an era where energy conservation is becoming increasingly important. This segment helps identify if the carrier is participating in these programs. A failure to do so may lead to inefficiencies and profit erosion.
The carrier questions need to be refined and augmented based on the unique transportation requirements of each shipper. In a future blog, I will outline potential red flags based on the answers to certain questions.
There is no doubt that some carriers will find certain questions intrusive. They are and are meant to be that way. As a company that transports goods to customers in various geographic locations, do you want to entrust your merchandise to companies that have a poor safety record, that are in financial difficulty, and/or will not be able assign dedicated customer service personnel to oversee the delivery of your freight? Do you want to take the risk that a trailer of your goods is not in a protected environment, that the carrier does not have enough equipment to replace a disabled truck while on route to a customer? Obtaining completed questionnaires and conducting carrier interviews (that I will discuss later) will provide you with peace of mind that your company employs quality carriers that will manage and deliver your freight in a safe, timely and secure manner.
To stay up to date on Best Practices in Freight Management, follow me on X (formerly Twitter) @DanGoodwill and join the Freight Management Best Practices group on LinkedIn. If you are looking for ways to improve the effectiveness of your freight management processes, to save money on freight, or to conduct a freight bid, contact me at dan@dantranscon.com.
