<?xml version="1.0" encoding="UTF-8"?><rss version="2.0" xmlns:content="http://purl.org/rss/1.0/modules/content/" xmlns:wfw="http://wellformedweb.org/CommentAPI/" xmlns:dc="http://purl.org/dc/elements/1.1/" xmlns:atom="http://www.w3.org/2005/Atom" xmlns:sy="http://purl.org/rss/1.0/modules/syndication/" xmlns:slash="http://purl.org/rss/1.0/modules/slash/" > <channel> <title>Best Practices in Freight Management Archives - DG&A Freight Consultants</title> <atom:link href="https://www.dantranscon.com/category/best-practices-in-freight-management/feed/" rel="self" type="application/rss+xml" /> <link>https://www.dantranscon.com/category/best-practices-in-freight-management/</link> <description></description> <lastBuildDate>Tue, 03 Sep 2024 21:07:57 +0000</lastBuildDate> <language>en-CA</language> <sy:updatePeriod> hourly </sy:updatePeriod> <sy:updateFrequency> 1 </sy:updateFrequency> <generator>https://wordpress.org/?v=6.7.2</generator> <image> <url>https://www.dantranscon.com/wp-content/uploads/2024/05/cropped-android-chrome-512x512-1-32x32.png</url> <title>Best Practices in Freight Management Archives - DG&A Freight Consultants</title> <link>https://www.dantranscon.com/category/best-practices-in-freight-management/</link> <width>32</width> <height>32</height> </image> <item> <title>10 Freight Bid Tips</title> <link>https://www.dantranscon.com/10-freight-bid-tips/</link> <dc:creator><![CDATA[Dan Goodwill]]></dc:creator> <pubDate>Tue, 03 Sep 2024 21:03:27 +0000</pubDate> <category><![CDATA[Best Practices in Freight Management]]></category> <category><![CDATA[Freight Bids]]></category> <category><![CDATA[Freight Cost Savings]]></category> <category><![CDATA[Uncategorized]]></category> <category><![CDATA[Finance and Transportation]]></category> <category><![CDATA[financial management]]></category> <category><![CDATA[Freight]]></category> <category><![CDATA[freight agreements]]></category> <category><![CDATA[freight bid]]></category> <category><![CDATA[Freight contracts]]></category> <category><![CDATA[freight cost savings]]></category> <category><![CDATA[freight costs]]></category> <category><![CDATA[Freight Management]]></category> <category><![CDATA[freight rates,]]></category> <category><![CDATA[freight RFP]]></category> <category><![CDATA[freight transportation]]></category> <category><![CDATA[Transportation]]></category> <guid isPermaLink="false">https://www.dantranscon.com/?p=2180</guid> <description><![CDATA[<p>The Labor Day weekend signals kids going back to school, the start of the NFL season, and the preparation of budgets for the coming year. For manufacturers and distributors, this process incorporates the construction of the annual freight transportation budget. For many shippers, this involves the execution of an annual freight bid. To help companies […]</p> <p>The post <a href="https://www.dantranscon.com/10-freight-bid-tips/">10 Freight Bid Tips</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></description> <content:encoded><![CDATA[<p>The Labor Day weekend signals kids going back to school, the start of the NFL season, and the preparation of budgets for the coming year. For manufacturers and distributors, this process incorporates the construction of the annual freight transportation budget. For many shippers, this involves the execution of an annual freight bid. To help companies achieve success with this process, here are ten tips.</p> <ol> <li><strong>Start with a Full Set of Objectives</strong></li> </ol> <p>Many companies look at the freight bid process as an opportunity to reduce, or at least minimize increases in shipping costs. While expense management is always a priority, this should be just one, albeit important, component of this process. Shippers should also utilize this process to upgrade the quality of their carrier business partners. Poor performers should be replaced, and carrier-related supply chain problems should be addressed and fixed. We also encourage our clients to look holistically at their carriers. While cost saving is important, there are times when it is worth paying a reasonable premium for superior service and customer satisfaction.</p> <ol start="2"> <li><strong>Get a Buy-In Other Divisions</strong></li> </ol> <p>For companies with multiple divisions, it is essential to obtain buy-in (and participation, when required) from all the GMs at the start. There is nothing worse than spending the time and effort on a project of this nature only to find that certain divisions won’t support the results upon completion.</p> <ol start="3"> <li><strong>Cast a Wide Net of Carrier Participants</strong></li> </ol> <p>At the outset of a freight bid, it is important to assemble a mix of carriers and logistics companies that can provide a range of solutions. The bid participants should include:</p> <p>a) Asset-based carriers, national, regional and local</p> <p>b) Intermodal Marketing Companies if there are truckload movements of more than 500 miles</p> <p>c) 3PLs if certain supply chain processes can be more effectively managed by an outside partner</p> <p>d) Freight brokers for lanes where it is hard to find capacity</p> <ol start="4"> <li><strong>Create a Comprehensive Carrier Questionnaire</strong></li> </ol> <p>A well-constructed questionnaire is an invaluable tool in the due diligence process. The questionnaire should encompass:</p> <p>a) Physical assets (e.g. tractors, trailers, terminals, staffing etc.)</p> <p>b) Service portfolio (e.g. LTL, TL, expedited, small parcel, refrigerated, heated)</p> <p>c) IT platform</p> <p>d) Customer service operation</p> <p>e) Reporting capabilities</p> <p>f) Service areas</p> <p>g) Licenses</p> <p>h) References</p> <ol start="5"> <li><strong>Conduct Face-to-Face Meetings with short-listed Carriers</strong></li> </ol> <p>This is a critical step to evaluate capabilities, professionalism and chemistry. It can also be used to resolve existing problem areas.</p> <ol start="6"> <li><strong>Sign Shipper – Carrier Agreements</strong></li> </ol> <p>Many of our clients have found value in signing multi-year contracts that include terms, conditions, and expectations, KPIs, a rate increase formula in future years and a host of other useful information. These agreements solidify the partnership and commitments with the carriers receiving bid awards.</p> <ol start="7"> <li><strong>Create a Robust Routing Guide with a set of Backup Carriers</strong></li> </ol> <p>This is another essential part of the process. The routing guide captures the primary and backup carriers, their volumes and rates, for each mode, on each lane.</p> <ol start="8"> <li><strong>Create and Implement a Plan</strong></li> </ol> <p>As part of the implementation process, establish face-to-face meetings with senior operations personnel in each bid award winner. Give new carriers trial shipments to test their on-time and customer service and verify the accuracy of their reports. Award business to carriers that prove they are worthy of handling your freight.</p> <ol start="9"> <li><strong>Establish and Monitor Freight Costs on a Consistent Basis</strong></li> </ol> <p>The creation of a carrier agreement and routing guide signals the end of one stage of the bid process and the beginning of another. At this point, it is important to ensure there is compliance with the routing guide, that the specified service levels are being supplied, and to ensure that the correct rates are being applied.</p> <ol start="10"> <li><strong>Track your Savings Against Projections and Investigate all Variances</strong></li> </ol> <p>As the weeks and months go by, it is important to verify that the actual costs match the projected costs. All variances should be investigated to determine if the primary carriers are not picking up their designated loads, or if incorrect carriers are being tendered shipments. Corrective action should be taken.</p> <p>Here is a final thought to consider. Does your transportation team have the time and expertise to conduct an effective freight bid exercise? If not, please feel to reach out to us. We have been successfully performing these activities for twenty years.</p> <p> </p> <p>To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>X</strong> (formerly Twitter)<strong> @DanGoodwill</strong> and join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong>. If you are looking for ways to improve the effectiveness of your freight management processes or to save money on freight, contact me at dan@dantranscon.com.</p> <p>The post <a href="https://www.dantranscon.com/10-freight-bid-tips/">10 Freight Bid Tips</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></content:encoded> </item> <item> <title>How to Successfully Implement the Results of a Freight Bid</title> <link>https://www.dantranscon.com/how-to-successfully-implement-the-results-of-a-freight-bid/</link> <dc:creator><![CDATA[Dan Goodwill]]></dc:creator> <pubDate>Mon, 12 Aug 2024 13:44:12 +0000</pubDate> <category><![CDATA[Best Practices in Freight Management]]></category> <category><![CDATA[Freight Bids]]></category> <category><![CDATA[Freight Cost Savings]]></category> <category><![CDATA[expense management]]></category> <category><![CDATA[expenses]]></category> <category><![CDATA[financial management]]></category> <category><![CDATA[Freight]]></category> <category><![CDATA[freight bid]]></category> <category><![CDATA[freight cost savings]]></category> <category><![CDATA[freight costs]]></category> <category><![CDATA[freight expense]]></category> <category><![CDATA[Freight Management]]></category> <category><![CDATA[freight rates,]]></category> <category><![CDATA[freight RFP]]></category> <category><![CDATA[freight transportation]]></category> <category><![CDATA[RFP]]></category> <guid isPermaLink="false">https://www.dantranscon.com/?p=2175</guid> <description><![CDATA[<p>Some shippers believe that once all the bids are in, the routing guide has been prepared, and the carriers have been notified of their awards, the freight bid exercise has been completed. This explains why many manufacturers that conduct these projects are disappointed with the results they achieve. Success does not take place automatically. There […]</p> <p>The post <a href="https://www.dantranscon.com/how-to-successfully-implement-the-results-of-a-freight-bid/">How to Successfully Implement the Results of a Freight Bid</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></description> <content:encoded><![CDATA[<p>Some shippers believe that once all the bids are in, the routing guide has been prepared, and the carriers have been notified of their awards, the freight bid exercise has been completed. This explains why many manufacturers that conduct these projects are disappointed with the results they achieve. Success does not take place automatically. There are several activities that are required, at this stage in the process, to solidify the expected improvements in service and costs.</p> <ol> <li><strong>Routing Guide Compliance</strong></li> </ol> <p>The projected cost savings can only be achieved through consistent routing guide compliance management. A company’s transportation management team must track and monitor compliance daily. If a company has a TMS system, non-compliance can be identified via a daily exception report. Any exceptions must be investigated and when necessary, corrective action taken.</p> <p>Several years ago, we conducted a freight bid for a large multi-plant truckload shipper. A few months after a bid was completed, I received a call from the Transportation Manager. He advised me that one of his plants was not experiencing the level of savings that had been projected. He asked me to investigate and report back to him.</p> <p>We found that the plant was not achieving the expected results since it was using a truckload carrier that did not rank in the top ten carriers in their routing guide. Upon investigation, we learned that the dispatcher and the carrier’s driver were friends. Their sons played on the same hockey team. The dispatcher was not following the routing guide on certain lanes of business.</p> <p>Directing the dispatcher to follow the routing guide, and a more careful monitoring of the daily exception report, fixed the problem. Quality data, timely reporting and daily monitoring are required maintain routing guide compliance. Senior management participation is also essential.</p> <ol start="2"> <li><strong>Carrier Management</strong></li> </ol> <p>In addition to the internal controls specified above, the carriers receiving bid awards must be carefully and consistently managed. There are several elements to consider.</p> <p>a) Tender Acceptance Management</p> <p>At the end of a bid exercise, shippers will typically award specific load volumes to carriers in designated geographic areas. The projected service improvements and cost savings are dependent on the carriers in the routing guide accepting the loads tendered to them. There will be times when a carrier will experience driver turnover or equipment breakdowns and not be able to cover their loads each week. If the problem become chronic and ongoing, this needs to be investigated and resolved.</p> <p>Trucking is a dynamic business. Carriers are gaining and losing business on an ongoing basis. If a carrier secures a new piece of business in a specific area, it may be at a higher revenue per mile than the rate the shipper that conducted the bid is paying on the same lane. Similarly, a carrier may lose a quality backhaul account and must replace it with a lower paying broker load. These types of situations will make the bid award less attractive to the carrier. Instead of taking their 3, 5 or 10 loads a week, the carrier may test the shipper to see if they will accept a high number of load refusals.</p> <p>It is not easy for a shipper to determine what are the true underlying reasons for the lower load acceptance rates. It is important for each shipper to try to establish open, honest communication with their core carriers. The manufacturer can then weigh their options (e.g. accept the situation, offer more loads to backup carriers, replace the carrier, conduct a “mini bid” to reallocate their loads on specific lanes).</p> <p>b) Carrier Performance Management</p> <p>In addition to the tender acceptance process, there is the issue of carrier performance in terms of on-time service, claims, billing accuracy and other key metrics. Poor carrier performance can result in lost customers. Each shipper-carrier contract should contain a section on Progressive Discipline (e.g. verbal warnings, written warnings, carrier replacement). Managing carrier performance requires a set of KPIs that should be in the contract and scheduled carrier meetings to discuss performance, and corrective action, when required, to maintain service standards.</p> <p>Summary</p> <p>Manufacturers invest in freight bid exercises to accomplish specific goals. Achieving these goals takes work. We encourage our clients to implement specific initiatives to track and manage routing guide compliance and to monitor and manage carrier performance. These measures will ensure that there is a satisfactory return on this investment.</p> <p> </p> <p>To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>X</strong> (formerly Twitter)<strong> @DanGoodwill</strong> and join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong>. If you are looking for ways to improve the effectiveness of your freight management processes or to save money on freight, contact me at dan@dantranscon.com.</p> <p>The post <a href="https://www.dantranscon.com/how-to-successfully-implement-the-results-of-a-freight-bid/">How to Successfully Implement the Results of a Freight Bid</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></content:encoded> </item> <item> <title>Create a Robust Routing Guide at the Completion of a Freight Bid</title> <link>https://www.dantranscon.com/create-a-robust-routing-guide-at-the-completion-of-a-freight-bid/</link> <dc:creator><![CDATA[Dan Goodwill]]></dc:creator> <pubDate>Fri, 26 Jul 2024 13:54:53 +0000</pubDate> <category><![CDATA[Best Practices in Freight Management]]></category> <category><![CDATA[Freight Bids]]></category> <category><![CDATA[Freight Cost Savings]]></category> <category><![CDATA[Freight]]></category> <category><![CDATA[freight bid]]></category> <category><![CDATA[freight cost savings]]></category> <category><![CDATA[freight costs]]></category> <category><![CDATA[Freight Management]]></category> <category><![CDATA[freight rates,]]></category> <category><![CDATA[freight RFP]]></category> <category><![CDATA[freight transportation]]></category> <category><![CDATA[intermodal]]></category> <category><![CDATA[LTL]]></category> <category><![CDATA[Transportation]]></category> <category><![CDATA[Truckload]]></category> <guid isPermaLink="false">https://www.dantranscon.com/?p=2171</guid> <description><![CDATA[<p>After the final round of freight bids have been submitted and analyzed, it is time to prepare a routing guide. This important document contains the preferred carriers by mode, by lane, and their approved rates. The contents of a routing guide can be entered into a shipper’s TMS system to guide the carrier selection process. […]</p> <p>The post <a href="https://www.dantranscon.com/create-a-robust-routing-guide-at-the-completion-of-a-freight-bid/">Create a Robust Routing Guide at the Completion of a Freight Bid</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></description> <content:encoded><![CDATA[<p>After the final round of freight bids have been submitted and analyzed, it is time to prepare a routing guide. This important document contains the preferred carriers by mode, by lane, and their approved rates. The contents of a routing guide can be entered into a shipper’s TMS system to guide the carrier selection process. The approved carrier bid rates can be matched against the rates charged in the carrier invoices, to control freight expenses.</p> <p>A routing guide is essentially a spreadsheet that varies from company to company, based on the number of modes and carriers needed to move the shipper’s freight. The routing guide is typically organized by origin point to geographic regions (e.g. Northeast, Midwest, Western Canada etc.), and to destination states and provinces, in alphabetic order (e.g. Alabama, Colorado, Delaware etc.).</p> <p><strong>Bid Awards</strong></p> <p>Carriers listed in a routing guide are selected from the following categories of bidders.</p> <ul> <li>Top Performers</li> <li>Above Average or Average Carriers</li> <li>New Carriers</li> <li>Low Ranked Carriers</li> </ul> <p>Shippers typically allocate their business first to the Top Performers. Business is awarded to carriers that display consistent on-time service, reliable customer service, flexibility, collaboration, strong reporting tools and competitive rates. It has been our experience that wise shippers reward their top carriers, with their priority lanes, even at a slight premium on price.</p> <p>The next tranche of volumes by lane can go to a combination of the Above Average, Average and New Carriers. This will be based on performance, the rankings from the carrier questionnaires, and the rankings based on price.</p> <p>Carriers that rank Low in performance, capabilities and rates often need to be replaced. Some carriers will conclude that their removal from the routing guide is based on price. The truth is that at this stage in the process, many shippers have been waiting for the final bid results so they can replace their weakest performers. Making these changes help them upgrade the quality of their transportation network. While price is always an issue, these decisions often come down to quality.</p> <p><strong>Backup Carriers</strong></p> <p>Shippers always need to reinforce their supply chains by creating and executing a strong back up plan. Carriers come and go. Some transport companies falter while others upgrade their fleets and human resources and thereby improve their capabilities and performance. Every manufacturer or distributor needs to ensure that they can move their goods to market, even if a carrier goes on strike, suffers an environmental event, is short of equipment on a specific day, or goes out of business.</p> <p>An effective routing guide displays the shipper’s core and backup carriers on every lane. To ensure these carriers are committed to the business, it is important to supply backup providers with a meaningful and consistent volume of business. In the case of an emergency, you want these carriers to step in and provide the same level of service that your customers are receiving today.</p> <p><strong>Maintaining Routing Guide Compliance</strong></p> <p>The routing guide is a blueprint to run your freight operations. It is a practical document that reflects what each carrier does best, the volumes they are able to handle effectively, and the rates they charge. The contents of the routing guide should be communicated to everyone who has responsibility for tendering freight. There is a requirement to establish compliance guidelines, so the designated carriers are used on the right lanes. Tracking mechanisms need to be established and monitored on a timely (e.g. daily, weekly, monthly) basis to minimize off plan spend. Corrective action should be taken whenever non-compliance is identified. Maintaining routing guide compliance ensures that the cost savings achieved during the bid process are realized.</p> <p> </p> <p>To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>X</strong> (formerly Twitter)<strong> @DanGoodwill</strong> and join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong>. If you are looking for ways to improve the effectiveness of your freight management processes or to save money on freight, contact me at dan@dantranscon.com.</p> <p> </p> <p>The post <a href="https://www.dantranscon.com/create-a-robust-routing-guide-at-the-completion-of-a-freight-bid/">Create a Robust Routing Guide at the Completion of a Freight Bid</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></content:encoded> </item> <item> <title>Analyzing the Results of a Freight Bid – Part 2 – The Carrier Meeting</title> <link>https://www.dantranscon.com/analyzing-the-results-of-a-freight-bid-part-2-the-carrier-meeting/</link> <dc:creator><![CDATA[Dan Goodwill]]></dc:creator> <pubDate>Fri, 19 Jul 2024 17:16:21 +0000</pubDate> <category><![CDATA[Best Practices in Freight Management]]></category> <category><![CDATA[Freight Bids]]></category> <category><![CDATA[Freight Cost Savings]]></category> <category><![CDATA[Freight Rate Pricing]]></category> <category><![CDATA[Shipper-Carrier Collaboration]]></category> <category><![CDATA[financial management]]></category> <category><![CDATA[Freight]]></category> <category><![CDATA[freight bid]]></category> <category><![CDATA[freight cost savings]]></category> <category><![CDATA[freight costs]]></category> <category><![CDATA[Freight Management]]></category> <category><![CDATA[freight rates,]]></category> <category><![CDATA[freight RFP]]></category> <category><![CDATA[freight transportation]]></category> <category><![CDATA[RFP]]></category> <category><![CDATA[shipper-carrier collaboration]]></category> <category><![CDATA[supply chain management]]></category> <category><![CDATA[Transportation]]></category> <guid isPermaLink="false">https://www.dantranscon.com/?p=2149</guid> <description><![CDATA[<p>After analyzing the completed carrier questionnaires, and the bid rates, it is time to eliminate those carriers that don’t meet expectations in terms of service, coverage, rates, and other key variables. It is also the time to identify a short list of potential bid award winners to discuss their proposals in more detail. This blog […]</p> <p>The post <a href="https://www.dantranscon.com/analyzing-the-results-of-a-freight-bid-part-2-the-carrier-meeting/">Analyzing the Results of a Freight Bid – Part 2 – The Carrier Meeting</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></description> <content:encoded><![CDATA[<p>After analyzing the completed carrier questionnaires, and the bid rates, it is time to eliminate those carriers that don’t meet expectations in terms of service, coverage, rates, and other key variables. It is also the time to identify a short list of potential bid award winners to discuss their proposals in more detail. This blog focuses on how to get the most out of the Carrier Interviews.</p> <p>Since these truckers, IMCs and/or freight brokers will interact directly with your customers, it is very important to meet with your potential business partners in person. Zoom or TEAMS meetings may be necessary in some instances (e.g. small bid award, distance from shipper), but in-person meetings are preferable.</p> <p>For carriers that will be given a select group of lanes or limited customers, a 30-minute interview may suffice. Carriers that may receive a larger bid award, a 60-minute meeting, or longer, may be required. Some carriers may ask for a pre-meeting lunch or dinner. My advice would be no lunches or dinners during this process so you can be fair and objective. I also recommend meeting in a comfortable conference room that has good ventilation, and a screen that can be connected to a computer. Keep in mind that some carriers will bring a small “army” to these meetings.</p> <p>I also recommend that you are clear on the date, location and timeline of the interview. Manage the time carefully so other carriers don’t have to wait extended periods of time for their interviews and/or miss their return flights.</p> <p>The interview should consist of 6 components.</p> <p><strong> 1. Introductions</strong></p> <p><strong> 2. Shipper Overview</strong> – 5 minutes</p> <p>The senior project manager should utilize a maximum of 3-4 PowerPoint slides. That person should focus on those elements that are most important to their transportation network. The slides should be easy to understand and highlight service, coverage, drop trailer or live load, appointment times, customer pickup and delivery requirements, reports – – – whatever is most important to the shipper and their customers.</p> <p><strong> 3. Carrier Overview</strong> – 10 minutes</p> <p>Similarly, carriers should prepare 3 or 4 PPT slides. Some carrier salespeople can be quite long-winded. The carrier spokesperson needs to be aware of their time allocation. The trucker or broker should be asked to outline how they would service the account in terms of assets, customer service, reports etc.</p> <p>Shippers need to listen carefully, and probe as required. Is the carrier a good fit from a service and culture perspective? How prepared are they for the meeting?</p> <p>Recently we conducted a bid for a mid-size shipper that moved truckloads of freight throughout the United States. On a weekly basis, they move one or two full loads direct to most of their customers and loads of LTL freight to multiple distribution centers. When one senior representative of a large carrier spoke, he mentioned that his company works on the 80/20 principle. Large shippers, twenty percent, receive eight percent of their assets. Smaller shippers, with 1 or 2 loads a week to specific locations, receive the balance of their capacity. If the carrier representative had studied the data, they would have realized that they were communicating the wrong message to this shipper. They did not receive any business.</p> <p>As a shipper, it is important to focus on whether the carrier is professional and how well they understand your requirements. Do they customize their presentation to address your specific requirements or deliver a “cookie cutter” message?</p> <p><strong> 4. Review Questions/Concerns from Carrier’s Bid</strong> – 20 minutes</p> <p>This is the time to obtain answers to questions that are not fully answered in the questionnaire. What is the carrier’s OR and how long has company been profitable? If the carrier has 10 to 20 trucks and has bid on multiple lanes, which blocks of business are they best equipped to handle (e.g. where they have reliable backhaul traffic)? If you are looking at LTL carriers, do they serve specific areas on a direct basis or through (handoffs to) interline carriers?</p> <p>How will your account be serviced? Where is the carrier’s equipment yard that is closest to your facilities? Do they have the assets and resources to manage the account? What added value to they bring to the business? What reports are they able to supply?</p> <p><strong> 5. Rates</strong> – 20 minutes</p> <p>We prepare rate analysis sheets for each carrier and present this information on the screen so each carrier can see their rate, the best rate, and where they rank, on every lane, for which they submitted a quote. Some incumbents hold back in their round 1 bid. This exercise helps them see that they need to be more competitive to retain the business. Where they are not competitive, we ask the carrier if they want this business, if they can do better on price, and how many loads a week they can handle. During this exercise, it becomes clear which blocks of business are the best fit for each transport company.</p> <p><strong> 6. Next Steps</strong> – 5 minutes</p> <p>At the end of the meeting, we advise the carriers that we will send them their rate analysis, via email, for the lanes they bid on. We ask them to resubmit their final bid by a specific deadline. We discuss whether the client will be seeking a contractual agreement or whether a rate sheet will be satisfactory. We also advise them of the length of the bid award and the rate increase formula in future years. The carrier interview, and the carrier’s responses during, and after the meeting, are key elements in the shipper’s decision-making process.</p> <p> </p> <p>To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>X</strong> (formerly Twitter)<strong> @DanGoodwill</strong> and join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong>. 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.</p> <p>The post <a href="https://www.dantranscon.com/analyzing-the-results-of-a-freight-bid-part-2-the-carrier-meeting/">Analyzing the Results of a Freight Bid – Part 2 – The Carrier Meeting</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></content:encoded> </item> <item> <title>Analyzing the Results of a Freight Bid – Part 1</title> <link>https://www.dantranscon.com/analyzing-the-results-of-a-freight-bid-part-1/</link> <dc:creator><![CDATA[Dan Goodwill]]></dc:creator> <pubDate>Thu, 11 Jul 2024 22:11:48 +0000</pubDate> <category><![CDATA[Best Practices in Freight Management]]></category> <category><![CDATA[Freight Bids]]></category> <category><![CDATA[Freight Cost Savings]]></category> <category><![CDATA[Freight Rate Pricing]]></category> <category><![CDATA[Finance and Transportation]]></category> <category><![CDATA[Freight]]></category> <category><![CDATA[freight bid]]></category> <category><![CDATA[freight cost savings]]></category> <category><![CDATA[freight costs]]></category> <category><![CDATA[Freight Management]]></category> <category><![CDATA[freight rates,]]></category> <category><![CDATA[freight RFP]]></category> <category><![CDATA[freight transportation]]></category> <category><![CDATA[RFP]]></category> <category><![CDATA[Transportation]]></category> <guid isPermaLink="false">https://www.dantranscon.com/?p=2144</guid> <description><![CDATA[<p>There comes a time during each freight bid when the full package (the shipping characteristics documents, fuel surcharge formulas, accessorial charge template, pricing instructions, carrier questionnaire, key milestone dates and data entry tools) is sent to a designated list of asset-based carriers and non-asset-based transportation providers. At this stage, it is valuable to arrange a […]</p> <p>The post <a href="https://www.dantranscon.com/analyzing-the-results-of-a-freight-bid-part-1/">Analyzing the Results of a Freight Bid – Part 1</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></description> <content:encoded><![CDATA[<p>There comes a time during each freight bid when the full package (the shipping characteristics documents, fuel surcharge formulas, accessorial charge template, pricing instructions, carrier questionnaire, key milestone dates and data entry tools) is sent to a designated list of asset-based carriers and non-asset-based transportation providers. At this stage, it is valuable to arrange a video conference call to explain the process and the bid expectations. This is often followed by a Q & A period when the carriers can gain a fuller understanding of the bid.</p> <p>After a designated number of days, the bids are submitted, and the shipper and/or consulting company analyzes the data and prepares their results summary. There are often three elements to the bid analysis.</p> <ol> <li>Analysis of the Questionnaire Responses</li> <li>Analysis of the Bids</li> <li>Interviews with a set of short-listed Carriers</li> </ol> <p>In this blog I will provide an overview of first two sets of data analysis; in the next blog, I will focus on the carrier interview.</p> <ol> <li><strong>Analysis of the Carrier Questionnaire</strong></li> </ol> <p>Initially each carrier questionnaire should be scrutinized to see if there are any questions that were left unanswered. A failure to provide a safety rating, a company’s OR, or the size of a company’s fleet, are telltale signs that the carrier has something to hide. The carrier should be asked to provide any missing information.</p> <p>The bid participants should then be ranked on how well they match against the shipper’ s requirements. The questionnaire is a screening device. Here are some key pieces of data that need to be extracted.</p> <ul> <li>Does the carrier have the assets and infrastructure to serve the account?</li> <li>Location of terminals, fleet and drivers</li> <li>Does the carrier’s service profile match the shipper’s requirements?</li> <li>Can they do 8 AM deliveries, weekend pickups, deliveries?</li> <li>If they provide specialized services (e.g. refrigerated LTL), what percent of their revenues are derived from this segment of their business?</li> <li>Days and hours when customer service is available.</li> <li>Will a dedicated and backup rep be assigned to service the account?</li> <li>Will these resources always be serving the account and its customers?</li> <li>Can the carrier supply a trailer pool, if required?</li> <li>Can they provide appointment pickups and deliveries?</li> </ul> <p>Small well managed local fleets can do an exceptional job in specific markets, but small, undercapitalized, poorly managed fleets can create a vulnerability.</p> <p>Performance Data</p> <p>We live in a very competitive environment; a shipper’s carriers need to perform at a high level.</p> <ul> <li>Will your carriers meet the shippers’ standards in terms of On Time service %, Claims Ratio, Billing Accuracy?</li> <li>How long have they been in business?</li> <li>What has been their OR over the last 5 years?</li> <li>Have they been consistently profitable?</li> </ul> <p>Data Supplied to Shippers</p> <p>These are some of the questions for which you should be seeking answers.</p> <ul> <li>What types of reports can the carrier provide?</li> <li>Can the carrier customize the reports to the shipper’s needs?</li> <li>How is the shipper notified of potentially late deliveries?</li> <li>Will the shipper be supplied with a username and password so they can go into the carrier’s website at any time of the day or night, to check on shipment delivery statuses?</li> </ul> <ol start="2"> <li><strong>Rate and Capacity Analysis</strong></li> </ol> <p>This is the component of the analysis where the data is segregated by service (e.g. LTL, TL etc.).</p> <p>Truckload</p> <p>This is the location where all TL bids are ranked for all carriers on every lane. State/province clusters should be analyzed to see how well each carrier can service a designated region. The rankings should be related to fleet capacities to make an initial determination as to how each carrier can service specific geographical areas. Similarly, all carriers should be evaluated based on total cost savings.</p> <p>LTL</p> <p>LTL data needs to be sorted by state/province and by region (e.g. NE USA, SW USA, NW USA, Atlantic Provinces etc.). This analysis and the cost saving by LTL carrier help determine which companies can play a meaningful role in servicing a shipper’s freight.</p> <p>Carrier Selection</p> <p>Obtaining answers to these key questions can help a shipper select a group of carriers that can be eliminated from the bid and another set of carriers that should be interviewed in person.</p> <ul> <li>How many carriers are required to service specific geographic areas?</li> <li>Do these carriers have enough equipment to meet our needs?</li> <li>How do I best leverage our volumes (e.g. state, region)?</li> <li>Since carriers go out of business (e.g. Roadway, CF, Yellow) or have capacity limitations, how many backup carriers should a shipper utilize to keep them engaged and interested?</li> </ul> <p>Completing this exercise allows shippers to invite a meaningful number of carriers to the important personal interview process.</p> <p> </p> <p>To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>X</strong> (formerly Twitter)<strong> @DanGoodwill</strong> and join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong>. If you are looking for ways to improve the effectiveness of your freight management processes or to save money on freight, contact me at dan@dantranscon.com.</p> <p> </p> <p>The post <a href="https://www.dantranscon.com/analyzing-the-results-of-a-freight-bid-part-1/">Analyzing the Results of a Freight Bid – Part 1</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></content:encoded> </item> <item> <title>A Carrier Questionnaire is a Key Component of a Quality Freight Bid</title> <link>https://www.dantranscon.com/a-carrier-questionnaire-is-key-component-of-a-quality-freight-bid/</link> <dc:creator><![CDATA[Dan Goodwill]]></dc:creator> <pubDate>Thu, 04 Jul 2024 22:41:29 +0000</pubDate> <category><![CDATA[Best Practices in Freight Management]]></category> <category><![CDATA[Freight Bids]]></category> <category><![CDATA[Freight Cost Savings]]></category> <category><![CDATA[Freight Rate Pricing]]></category> <category><![CDATA[expense management]]></category> <category><![CDATA[expenses]]></category> <category><![CDATA[Freight]]></category> <category><![CDATA[freight bid]]></category> <category><![CDATA[freight cost savings]]></category> <category><![CDATA[freight costs]]></category> <category><![CDATA[freight expense]]></category> <category><![CDATA[Freight Management]]></category> <category><![CDATA[freight rates,]]></category> <category><![CDATA[freight RFP]]></category> <category><![CDATA[shipper-carrier collaboration]]></category> <category><![CDATA[supply chain management]]></category> <category><![CDATA[Transportation]]></category> <guid isPermaLink="false">https://www.dantranscon.com/?p=2132</guid> <description><![CDATA[<p>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. […]</p> <p>The post <a href="https://www.dantranscon.com/a-carrier-questionnaire-is-key-component-of-a-quality-freight-bid/">A Carrier Questionnaire is a Key Component of a Quality Freight Bid</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></description> <content:encoded><![CDATA[<p>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.</p> <p>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:</p> <p><strong> 1. Carrier Assets and Capabilities</strong></p> <ul> <li>Head office location</li> <li>Tractors/trailers by type (e.g. dry, refrigerated etc.)</li> <li>Number of drivers</li> <li>Number and location of terminals</li> <li>Terminals are in secure locations</li> <li>Days and hours of operation</li> <li>Union/Non-union operation</li> <li>Expiry date of contract</li> <li>Licenses and authorities</li> </ul> <p>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.</p> <p><strong> 2. Services</strong></p> <ul> <li>Small parcel, LTL, truckload, expedited etc.</li> <li>% of revenues derived from services that match the shippers’ requirements (e.g. refrigerated LTL)</li> <li>Geographic coverage</li> <li>Early morning/after hours service</li> <li>Weekend service</li> <li>Will dedicated customer service personnel be assigned to the shipper?</li> <li>Drop trailers</li> <li>Specialized equipment (Be specific)</li> </ul> <p>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.</p> <p><strong> 3. Performance Ratings</strong></p> <ul> <li>Safety rating</li> <li>Operating Metrics (e.g. On-time service, claims ratio etc.)</li> <li>Financial metrics (e.g. Operating Ratio over last 5 years)</li> <li>Years in business</li> </ul> <p>This responses to these questions help determine if the carrier runs a safe, efficient, profitable operation.</p> <p><strong> 4. IT Capabilities</strong></p> <ul> <li>Application of AI in the business</li> <li>Automated Transportation Management System</li> <li>Online track and trace</li> <li>EDI billing</li> <li>Online and exception reports</li> </ul> <p>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.</p> <p><strong> 5. Energy Efficiency Programs</strong></p> <ul> <li>Participation in SmartWay/FleetSmart programs</li> <li>Electric vehicles</li> <li>ELD utilization</li> </ul> <p>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.</p> <p>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.</p> <p>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.</p> <p> </p> <p>To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>X</strong> (formerly Twitter)<strong> @DanGoodwill</strong> and join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong>. 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.</p> <p> </p> <p>The post <a href="https://www.dantranscon.com/a-carrier-questionnaire-is-key-component-of-a-quality-freight-bid/">A Carrier Questionnaire is a Key Component of a Quality Freight Bid</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></content:encoded> </item> <item> <title>How to Select the Right Carriers for a Freight Bid</title> <link>https://www.dantranscon.com/how-to-select-the-right-carriers-for-a-freight-bid/</link> <dc:creator><![CDATA[Dan Goodwill]]></dc:creator> <pubDate>Thu, 27 Jun 2024 22:41:13 +0000</pubDate> <category><![CDATA[Best Practices in Freight Management]]></category> <category><![CDATA[Freight Bids]]></category> <category><![CDATA[Freight Cost Savings]]></category> <category><![CDATA[Freight Rate Pricing]]></category> <category><![CDATA[financial management]]></category> <category><![CDATA[Freight]]></category> <category><![CDATA[freight bid]]></category> <category><![CDATA[freight cost savings]]></category> <category><![CDATA[freight costs]]></category> <category><![CDATA[Freight Management]]></category> <category><![CDATA[freight rates,]]></category> <category><![CDATA[freight RFP]]></category> <category><![CDATA[RFP]]></category> <guid isPermaLink="false">https://www.dantranscon.com/?p=2126</guid> <description><![CDATA[<p>Selecting the right mix of carriers is a critical step in the execution of every freight bid. Creating a critical mass of carriers, in terms of quantity and quality, has several benefits. First, it ensures that the shipper is engaging with companies that can become strong business partners at the end of the process; these […]</p> <p>The post <a href="https://www.dantranscon.com/how-to-select-the-right-carriers-for-a-freight-bid/">How to Select the Right Carriers for a Freight Bid</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></description> <content:encoded><![CDATA[<p>Selecting the right mix of carriers is a critical step in the execution of every freight bid. Creating a critical mass of carriers, in terms of quantity and quality, has several benefits. First, it ensures that the shipper is engaging with companies that can become strong business partners at the end of the process; these companies can effectively serve the shipper’s core lanes and transport their full volumes. Second, it makes the exercise competitive, so at the end of the bid, the shipper derives the maximum value from this large business expense.</p> <p><strong>The Selection Criteria</strong></p> <p>The number of carriers selected for a bid should relate directly to the size and scope of the business. It has been our experience that some shippers do not have the time or energy to compile a comprehensive list. There are some manufacturers and distributors that simply do not know many of the industry players. They go back to the same set of carriers for each bid. That limits the value of the process and can result in higher than necessary freight expenses.</p> <p>Each shipper should begin the carrier search process by answering these questions.</p> <ul> <li>Is my company currently using the most appropriate modes of transport?</li> <li>Do I have enough carriers to meet the full range of transportation needs of our company?</li> <li>What is the incentive for a carrier to participate in our bid?</li> <li>Will each carrier in the bid have a fair chance at securing business from my company?</li> <li>How many carriers are needed to serve our business?</li> </ul> <p>Here are a few thoughts on each of these questions.</p> <p>Most businesses change over time. New markets, new customers, lost customers, changing volumes and shifts in purchasing behavior can drive modifications in carrier requirements. A shipper may reach a point where it needs to look beyond its current portfolio of small parcel, LTL and truckload carriers. If your company receives products from, or ships to destinations that are hundreds of miles away, consider inviting some Intermodal Marketing Companies (IMCs) that compete on these lanes. Also consider inviting some freight brokers that may be able to find trucking companies that serve remote or low volume lanes.</p> <p>Over the years I have heard shippers make comments about a certain carrier with whom they had claims or service issues 10 or more years ago. Companies change, management teams change. Carriers with consistent problems lose market share and/or go out of business. Consider giving an opportunity to carriers that have not been considered in recent years.</p> <p>The number of carriers invited to a bid must match with the company’s volume of business, service requirements, customer locations, and the requirement for refrigerated or heated service. Inviting fifty carriers to a $5 million bid would be overkill; inviting twenty carriers to a $80 million bid would be inadequate. Look to the “major players” to serve large geographical areas, but include regional or local carriers and/or freight brokers that serve smaller or more remote locations.</p> <p>Shippers need to understand that trucking companies are going to assign their precious pricing resources to respond to a bid. They cannot afford to allocate these resources to accounts that are not a fit for their business or where the likelihood of success is limited.</p> <p>While your incumbent carriers are familiar with your business, potential new suppliers need information upon which to base their decision to participate. Keep in mind that to attract potential new carriers, shippers must supply at least a detailed business overview, to “sell” potential prospects on the potential value of your shipments.</p> <p>Carriers that participate in a shipper’s bid process, year after year, with no success, may become skeptical, particularly if the same carriers are always awarded business. Shippers need to communicate at the beginning, and throughout the bid, that the process is a fair and open. “Actions speak louder than words.” Neither side wins if carriers make a token response to a bid. Shippers also need to be realistic about how they should leverage their volumes and how many carriers they can manage effectively.</p> <p><strong>How and Where to Find Prospects</strong></p> <p>There are several sources available to shippers to facilitate their recruiting process. They include:</p> <ul> <li>Traffic clubs</li> <li>Attendance at industry events</li> <li>Examining Trucking Associations membership lists</li> <li>Participation in Trade Association meetings</li> <li>Google searches</li> </ul> <p>If this task is too time consuming or arduous, a shipper can lean on a consulting company partner to do this work. Many of us that have done these projects over the years; we maintain lists from previous assignments.</p> <p><strong>Purify the List</strong></p> <p>As the list comes together, the shipper should take two steps to refine it. First the company should send out a Non-Disclosure Agreement to ensure that each carrier participant commits to keeping the information confidential. Second, the shipper should send out a questionnaire to capture a full profile of each bidder. I will outline the components of a carrier questionnaire in the next blog.</p> <p>Keep in mind that some companies will refuse to sign an NDA or submit a completed questionnaire, or both. This will reduce the list to those companies that are genuinely interested in your business. The list will shrink again as carriers look at the lanes and volumes; some carriers will decide that they are not a fit for their business model. This reinforces the need to do the required due diligence so you can start the project with a robust list.</p> <p>The post <a href="https://www.dantranscon.com/how-to-select-the-right-carriers-for-a-freight-bid/">How to Select the Right Carriers for a Freight Bid</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></content:encoded> </item> <item> <title>What Data Do Shippers Need to Prepare to Conduct a Freight Bid?</title> <link>https://www.dantranscon.com/what-data-do-shippers-need-to-prepare-to-conduct-a-freight-bid/</link> <dc:creator><![CDATA[Dan Goodwill]]></dc:creator> <pubDate>Fri, 21 Jun 2024 14:52:48 +0000</pubDate> <category><![CDATA[Best Practices in Freight Management]]></category> <category><![CDATA[Freight Bids]]></category> <category><![CDATA[Freight Cost Savings]]></category> <category><![CDATA[financial management]]></category> <category><![CDATA[Freight]]></category> <category><![CDATA[freight bid]]></category> <category><![CDATA[freight cost savings]]></category> <category><![CDATA[freight costs]]></category> <category><![CDATA[freight expense]]></category> <category><![CDATA[Freight Management]]></category> <category><![CDATA[freight rates,]]></category> <category><![CDATA[freight RFP]]></category> <category><![CDATA[freight transportation]]></category> <category><![CDATA[Shipper]]></category> <category><![CDATA[shipping]]></category> <category><![CDATA[supply chain]]></category> <category><![CDATA[supply chain management]]></category> <category><![CDATA[Transportation]]></category> <guid isPermaLink="false">https://www.dantranscon.com/?p=2116</guid> <description><![CDATA[<p>Securing competitive rates from carriers is a fundamental component of each freight bid. To construct accurate bids, carriers require good quality shipping data. Inaccurate or superficial data can invalidate the entire bid process. Poor quality data also reflects badly on the credibility of the manufacturer or distributor. What Data Does a Shipper Need to Prepare? […]</p> <p>The post <a href="https://www.dantranscon.com/what-data-do-shippers-need-to-prepare-to-conduct-a-freight-bid/">What Data Do Shippers Need to Prepare to Conduct a Freight Bid?</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></description> <content:encoded><![CDATA[<p>Securing competitive rates from carriers is a fundamental component of each freight bid. To construct accurate bids, carriers require good quality shipping data. Inaccurate or superficial data can invalidate the entire bid process. Poor quality data also reflects badly on the credibility of the manufacturer or distributor.</p> <p><strong>What Data Does a Shipper Need to Prepare?</strong></p> <ol> <li><em>A Complete Blueprint of the Shipper’s Processes and Freight Characteristics</em></li> </ol> <p>Specifically, the carrier needs detailed information on:</p> <ul> <li>The commodities shipped</li> <li>The shipper’s hours of operation</li> <li>The types of freight – parcel, LTL and/or TL</li> <li>Shipment dimensions, weights and cubes</li> <li>Appointment pickups or deliveries</li> <li>Type of trucking equipment (e.g. straight truck, flatbed) required to pick up and deliver the shipments</li> <li>Photos of all pallet configurations</li> <li>Modes of Transport – Truck, Rail, Air, Sea</li> <li>Live load or drop trailer</li> <li>Description of the packaging: palletized, loose cartons, pails, etc.</li> <li>Types of delivery sites – apartment buildings, job sites, retail stores, manufacturing plants</li> <li>Waiting times for pickups and deliveries</li> <li>Special services required, if any – lumpers, crane, tailgate</li> <li>Requirement for heated or refrigerated service (temperature requirements – frozen, ambient, specific temperature range)</li> <li>Single shipment or multi-stop (e.g. milk run) deliveries</li> <li>Shipment consolidation or deconsolidation points</li> <li>Transit time requirements on every lane</li> </ul> <ol start="2"> <li><em>A Minimum of 6 months to a year of Granular Data for each Mode</em></li> </ol> <p>By providing this volume of data, in this format, the carrier can identify shipping patterns and seasonality effects. It allows carriers to determine how they will service the account and how effectively it will match with their headhaul/backhaul capabilities.</p> <p>Separate templates are required to capture the rates by mode (over the road, intermodal, expedited, air) and service (LTL, TL, parcel). The spreadsheets should display, by shipment, the origin city, state/province, zip code/postal code, destination city, state/province and postal code/zip code and the individual characteristics of each shipment (see above).</p> <p>Note that this shipment data serves two purposes. On the one hand, it allows the manufacturer to calculate their benchmark freight costs by service, by lane. This allows them to calculate the variance between their existing and post-bid freight expenses. Second, it allows the shipper to construct data templates that the carriers can use to insert their rates.</p> <ol start="3"> <li><em>How to Quote</em></li> </ol> <p>The shipper needs to supply bidders with the pricing methodology to be employed. The templates should be organized in a way that each carrier can quote on the services that they are able to provide and the lanes they can service; they should capture the rates in a format (e.g. rate per mile, LTL weight breaks etc.) that is relevant to that service.</p> <p><em> 4. Accessorial Charges Templates</em></p> <p>There should also be a template that captures the special services (e.g. detention) and acceptable accessorial charges for each service. The shipper must also provide acceptable, industry standard fuel surcharge formulas for each service (LTL, truckload). Providing these templates up front reduces the data analysis when the bids arrive.</p> <p>There also needs to be a document that outlines the bid milestone dates and the date when the bid is to be submitted.</p> <p><strong>Data Extraction Process</strong></p> <p>The data capture and bid preparation process is much easier for companies that use a TMS (Transportation Management System). A TMS system can produce the data in the formats outlined above.</p> <p>It has been our experience that the quality of the data available from each TMS system can vary significantly. Data entry errors can corrupt the data. Some shippers are not able to extract the fuel surcharge and accessorial charges from the freight cost associated with each shipment. This can create challenges in developing meaningful benchmark data.</p> <p>Before any data is transmitted to carriers, shippers need to perform a cleansing process to remove errors; they must also perform an editing process to remove lost customers and inactive shipping lanes. Similarly, they should revise the data to reflect new markets or projected changes to volumes and types of freight on specific lanes.</p> <p><strong>Summary</strong></p> <p>Garbage Out will result in Garbage In. This process is a crucial component of each freight bid. Taking shortcuts in preparing quality benchmark data and data templates will reduce the value of a bid project. Shippers that have the IT tools, the resources, and sufficient time, can perform these tasks on their own. Manufacturers and distributors that don’t possess these skills in-house can reach out to experienced service providers for assistance.</p> <p> </p> <p>To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>X</strong> (formerly Twitter)<strong> @DanGoodwill</strong> and join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong>. 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.</p> <p> </p> <p>The post <a href="https://www.dantranscon.com/what-data-do-shippers-need-to-prepare-to-conduct-a-freight-bid/">What Data Do Shippers Need to Prepare to Conduct a Freight Bid?</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></content:encoded> </item> <item> <title>How Frequently Should a Company Conduct a Freight Bid?</title> <link>https://www.dantranscon.com/how-frequently-should-a-company-conduct-a-freight-bid/</link> <dc:creator><![CDATA[Dan Goodwill]]></dc:creator> <pubDate>Fri, 14 Jun 2024 18:01:54 +0000</pubDate> <category><![CDATA[Best Practices in Freight Management]]></category> <category><![CDATA[Freight Bids]]></category> <category><![CDATA[Freight Cost Savings]]></category> <category><![CDATA[financial management]]></category> <category><![CDATA[Freight]]></category> <category><![CDATA[freight agreements]]></category> <category><![CDATA[freight bid]]></category> <category><![CDATA[Freight contracts]]></category> <category><![CDATA[freight cost savings]]></category> <category><![CDATA[freight costs]]></category> <category><![CDATA[Freight Management]]></category> <category><![CDATA[freight rates,]]></category> <category><![CDATA[freight RFP]]></category> <category><![CDATA[freight transportation]]></category> <category><![CDATA[intermodal]]></category> <category><![CDATA[LTL]]></category> <category><![CDATA[RFP]]></category> <category><![CDATA[Transportation]]></category> <category><![CDATA[Truckload]]></category> <guid isPermaLink="false">https://www.dantranscon.com/?p=2111</guid> <description><![CDATA[<p>This is one of the most frequently asked questions we receive from our shipper clients. Here is our perspective. The Forces that Shape our Views on this Subject For 20 years, during my early years in the transportation industry, I led asset-based carriers and non-asset-based freight broker organizations. My colleagues and I were on the […]</p> <p>The post <a href="https://www.dantranscon.com/how-frequently-should-a-company-conduct-a-freight-bid/">How Frequently Should a Company Conduct a Freight Bid?</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></description> <content:encoded><![CDATA[<p>This is one of the most frequently asked questions we receive from our shipper clients. Here is our perspective.</p> <p><strong>The Forces that Shape our Views on this Subject</strong></p> <p>For 20 years, during my early years in the transportation industry, I led asset-based carriers and non-asset-based freight broker organizations. My colleagues and I were on the receiving end of many shipper freight bids.</p> <p>For the past 20 years my associates and I have been conducting freight bids for shippers. From time to time, we have been asked to help carriers respond to complex bids</p> <p>We know that many carriers view freight bids as dreaded adversarial exercises. This view has arisen since some shippers have used freight bids as transactional tools to take advantage of carriers when they have leverage. We have seen shippers conduct bids on a quarterly basis to exploit the market dynamics.</p> <p>We have also seen carriers take advantage of their leverage when the market is more favorable to them. As Covid concerns created a capacity shortage in 2021 – 22, we saw carriers take large rate increases, without negotiation. This has resulted in a certain level of skepticism about the integrity of the bid process.</p> <p><strong>Shipper – Carrier Relationships</strong></p> <p>From our many years in the business, we believe we have a full understanding of the needs of both parties. We recognize that shippers and carriers need each other. Shippers need reliable carriers to provide consistent, cost competitive service from their vendors to their manufacturing plants and from these plants to their customers. Carriers require shippers with consistent volumes, at profitable rates, so they can run sustainable businesses. In other words, these relationships are essential to the success of both parties. So why aren’t all shipper-carrier relationships effective?</p> <p><strong>Why Some Shipper – Carrier Relationships Fail?</strong></p> <p>With shippers under pressure to keep transportation costs low (to maximize profits), there are situations where transportation managers will do end runs on their core carriers to secure lower rates. Carriers will also do end runs by supplying their limited fleet equipment to more profitable customers (e.g. higher revenue per mile and/or with better paying backhaul). Some carriers will offer low rates to secure a block of business and then try to raise the rates to bring them to profitable levels.</p> <p>Businesses are dynamic organizations. As they evolve, there are times when the two parties drift apart as their needs change. There are times when carrier service levels decline. There are times when the volume of business between the parties is so minimal that a transactional rather than strategic relationship is quite satisfactory.</p> <p>However, when significant volumes of freight are being tendered and transported by designated carriers, that have a material impact on a shipper’s business, there is a requirement to solidify these relationships, to the benefit of both parties. These relationships must be managed and nurtured.</p> <p><strong>What do Shippers and Carriers Need to Do to Create a Strategic Partnership?</strong></p> <p>These are the key attributes make these alliances work.</p> <ul> <li>Trust</li> <li>Open and honest information sharing</li> <li>In depth understanding of each other’s needs and requirements</li> <li>Shipper partners receive priority access to equipment</li> <li>Carrier partners receive right of first refusal on loads that fit within their networks</li> <li>Contracts with COLA increases on an annual basis, or rate sheets with GRI rate increase discussions, so there is a commitment to make these partnerships work over a multi-year period.</li> </ul> <p>Creating these types of partnerships takes time, commitment and effort. Quality committed carriers become an extension of the shipper’s company. They elevate the level of service a shipper’s customers receive. In our view. The results are worth the effort.</p> <p><strong>Summary</strong></p> <p>Bids work for shippers with multi-million-dollar freight spends that consistently allocate volumes to a list of qualified carriers. Bids work for carriers that receive consistent volumes of freight on their major traffic lanes. Bids work when both parties commit to a strategic relationship. For shippers that establish contractual multi-year relationships with their core carriers, a bid every 2 – 3 years works well.</p> <p>A comprehensive, professional bid typically requires some level of work over a 3-to-5-month period. Working on a bid takes time away from the transportation management team’s normal day-today duties. It has been our experience that there are many benefits to this approach as there are with creating and maintaining the company’s other major business relationships. We encourage shippers, with significant freight volumes, to take advantage of the benefits that accrue from a well executed freight bid.</p> <p> </p> <p>To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>X</strong> (formerly Twitter)<strong> @DanGoodwill</strong> and join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong>. If you are looking for ways to improve the effectiveness of your freight management processes or to save money on freight, contact me at dan@dantranscon.com.</p> <p> </p> <p>The post <a href="https://www.dantranscon.com/how-frequently-should-a-company-conduct-a-freight-bid/">How Frequently Should a Company Conduct a Freight Bid?</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></content:encoded> </item> <item> <title>Conducting a Freight Bid – Should We Do It Ourselves or Seek Outside Help?</title> <link>https://www.dantranscon.com/conducting-a-freight-bid-should-we-do-it-ourselves-or-seek-outside-help/</link> <dc:creator><![CDATA[Dan Goodwill]]></dc:creator> <pubDate>Fri, 07 Jun 2024 19:16:11 +0000</pubDate> <category><![CDATA[Best Practices in Freight Management]]></category> <category><![CDATA[Freight Bids]]></category> <category><![CDATA[Freight Cost Savings]]></category> <category><![CDATA[Freight Rate Pricing]]></category> <category><![CDATA[Intermodal]]></category> <category><![CDATA[LTL Freight]]></category> <category><![CDATA[Truckload Transportation]]></category> <category><![CDATA[Uncategorized]]></category> <category><![CDATA[Finance and Transportation]]></category> <category><![CDATA[financial management]]></category> <category><![CDATA[freight bid]]></category> <category><![CDATA[freight costs]]></category> <category><![CDATA[Freight Management]]></category> <category><![CDATA[freight rates,]]></category> <category><![CDATA[freight RFP]]></category> <category><![CDATA[freight transportation]]></category> <category><![CDATA[intermodal]]></category> <category><![CDATA[LTL]]></category> <category><![CDATA[Truckload]]></category> <guid isPermaLink="false">https://www.dantranscon.com/?p=2106</guid> <description><![CDATA[<p>As outlined in previous blogs, most companies conduct a freight bid to achieve certain objectives. These may include saving money on shipping costs, upgrading the quality of their carriers, and/or improving service. Success can be measured in terms of a reduction in freight expenses, higher on-time service, greater customer satisfaction, or other metrics. To achieve […]</p> <p>The post <a href="https://www.dantranscon.com/conducting-a-freight-bid-should-we-do-it-ourselves-or-seek-outside-help/">Conducting a Freight Bid – Should We Do It Ourselves or Seek Outside Help?</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></description> <content:encoded><![CDATA[<p>As outlined in previous blogs, most companies conduct a freight bid to achieve certain objectives. These may include saving money on shipping costs, upgrading the quality of their carriers, and/or improving service. Success can be measured in terms of a reduction in freight expenses, higher on-time service, greater customer satisfaction, or other metrics.</p> <p>To achieve quantifiable improvements, the project team must have the skills and resources to effectively plan and execute a project of this nature. Companies conduct these projects either internally or externally depending on whether they are equipped to do so.</p> <p>It has been our experience that some companies attain less than optimum results by not fully appreciating what is involved in conducting a successful freight bid. Here are some items to consider.</p> <ol> <li><strong>Quality Data</strong></li> </ol> <p>To prepare competitive rates, carriers need to be supplied with complete, accurate data on their shippers’ lanes, volumes, and modes. Six months to a year of detailed shipping data is typically the minimum requirement. A failure to provide carriers with quality data during the bid process can result in unscheduled rate increases or a need to find alternate carriers.</p> <ol start="2"> <li><strong>Extensive Database of Carriers</strong></li> </ol> <p>One of the mistakes we have seen some shippers make is to continually contact the same carriers every year. This limits opportunities to identify potentially superior partners and reduces the prospects of securing more competitive pricing. It is essential that each shipper cast a wide net to secure asset and non-asset-based companies that can meet their needs.</p> <ol start="3"> <li><strong>Effective Data Analysis Tools</strong></li> </ol> <p>There is a considerable amount of data transmission during a bid. There is also a requirement to be able to create the data templates, and to upload, analyze and massage the data; there is a requirement to rank the carrier rates and other data elements in an expeditious manner, under varying geographically scenarios. Some shippers don’t have the analytical tools to perform these tasks in a timely manner.</p> <ol start="4"> <li><strong>Adequate Freight Transportation Knowledge</strong></li> </ol> <p>Shippers need to understand the range of options available to move their freight. As the years go by, shipping patterns and volumes may evolve. Shippers may be able to consolidate volumes at origin or deconsolidate partial or full loads at destination. For some lanes, intermodal shipping may be a cost-effective option to over the road shipping.</p> <p>Transportation Managers also need to have a solid grasp of the additional services that may be triggering accessorial charges. They need to be able to assess if there are some supply chain deficiencies that are causing detention charges or late deliveries, before putting their freight out for bid.</p> <ol start="5"> <li><strong>Carrier Management and Negotiating Skills</strong></li> </ol> <p>In every bid, there is a requirement to do a “deep dive” into the operations of at least some new and existing carriers, to evaluate opportunities for improvement and to see if they are a fit with the company’s operations. There is a necessity to conduct thoughtful discussions with each carrier to look for situations where service improvements can be made and where leveraging volumes can lead to further cost savings. There is also a prerequisite to discuss and negotiate all aspects of freight pricing in a meaningful way.</p> <ol start="6"> <li><strong>Post-Bid Compliance Skills</strong></li> </ol> <p>Many shippers operate under the belief that once the bidding process is complete, the project is over. It isn’t. The effective execution of a bid is essential to achieving the project’s objectives. For certain carriers, it may be beneficial to sign contractual agreements with measurable expectations, and progressive discipline clauses, to ensure compliance and performance. A set of KPIs, scorecards, a routing guide, and scheduled carrier meetings, are also essential to manage the carrier compliance process.</p> <p>To conduct a successful bid, to effectively manage and control freight transportation expenses, each manufacturer and distributor needs to evaluate if they have the skills and resources internally or seek outside assistance. If not, there are a range of options available to them.</p> <p> </p> <p> </p> <p>To stay up to date on <strong>Best Practices in Freight Management</strong>, follow me on <strong>X</strong> (formerly Twitter)<strong> @DanGoodwill</strong> and join the <strong>Freight Management Best Practices</strong> group on <strong>LinkedIn</strong>. 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.</p> <p>The post <a href="https://www.dantranscon.com/conducting-a-freight-bid-should-we-do-it-ourselves-or-seek-outside-help/">Conducting a Freight Bid – Should We Do It Ourselves or Seek Outside Help?</a> appeared first on <a href="https://www.dantranscon.com">DG&A Freight Consultants</a>.</p> ]]></content:encoded> </item> </channel> </rss>