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.

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.).

Bid Awards

Carriers listed in a routing guide are selected from the following categories of bidders.

• Top Performers
• Above Average or Average Carriers
• New Carriers
• Low Ranked Carriers

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.

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.

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.

Backup Carriers

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.

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.

Maintaining Routing Guide Compliance

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.

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 or to save money on freight, contact me at dan@dantranscon.com.