Freight bid projects have become one of the most commonly used methods of sourcing freight transportation services over the past two decades. They have become popular with shippers for obvious reasons. When done well, they produce good results. Manufacturers and distributors can strengthen their supply chains by selecting a dedicated group of professional transportation companies and save money on freight costs.
The carrier perspective on freight bids is often quite different from that of most shippers. They tend to dislike them for several reasons.
1. Many bids are not well done.
2. The process of responding to these bids is a lot of work and they often don’t produce any business.
3. Shippers often tend to focus more on price and less on service and capacity.
4. Freight bids tend to breed tactical, adversarial relationships rather than collaborative long-term partnerships.
Frankly, from what I see and hear, these are often legitimate concerns. Poorly conducted freight bids produce weak or no results. Some shippers conclude that the process doesn’t work since they do not achieve the results they were seeking. On the other side, carriers are frustrated for the reasons outlined above. It is this feedback that was the inspiration for this series of freight bid tips.
A freight bid should not be used to bludgeon carriers into submission. Being an aggressive, selfish shipper does not guarantee low rates. On the contrary, a poorly conducted freight bid can end up costing the shipper in terms of poor quality transportation companies and bad service.
For shippers who follow the eleven tips contained in this series of blogs, and avoid the temptation to take shortcuts or bullying tactics, freight bids can produce excellent results. They can be a stepping stone to building solid partnerships with a company’s core carriers.
The freight market is expected to be quite different in the next few years. Many pundits predict that rates will rise significantly as capacity tightens, new regulations take effect and the economy strengthens. These are the headwinds that shippers will face as they seek to procure transportation services. A well conducted freight bid project combined with methodical implementation and compliance tracking take work. It has been our experience that the ROI is worth the effort. In fact, the level of success achieved correlates directly with quality of the bid. Take the time to do it right.
I would welcome feedback from shippers or carriers on how to improve the process. If I receive some worthwhile suggestions, I will capture them in a future blog. For shippers that don’t have the skills or resources to do the work internally or for carriers that need help in responding to freight bids, feel free to contact me at dan@dantranscon.com.
