Shippers, will your Freight Bid Secure the Capacity you need to Move your Shipments?

Freight volumes are at record levels on many lanes this fall. Load rejections, freight embargoes and rate increases are now becoming the norm. Even driver shortages, which started to dwindle in the early stages of the pandemic, are once again a factor in securing capacity to move freight. Motor carriers have leverage as to the shippers they wish to serve. For the past several decades, many shippers have turned to a commonly used tool to secure capacity and competitive rates, the freight bid.

My colleagues and I have reviewed many bids over the years and have successfully conducted dozens of these projects for our shipper clients. In some cases, we have been asked by carriers to help them prepare responses to the bids they receive. We have also reviewed RFPs for many other kinds of services including software procurement, organizational structure review, transportation, and production process efficiency. In so many cases we have remarked that our services would have been just as valuable helping the bid or RFP issuer craft a document that met basic professional standards for quality through attention to detail and exacting editing.

Sure, carriers will respond (sometimes) to poorly crafted bids, but they do so with a somewhat diminished opinion of the requesting company. This is only natural – we all tend to be editors and evaluators, especially of documents that require time and effort to prepare a response.

What separates the successful from the unsuccessful RFPs? This is what we have observed.

1. The Quality of the Writing is Important

In this era when shippers are competing for the limited carrier capacity that is available, the quality of the bid is a critical component. Bids that contain multiple typos and grammar mistakes reflect poorly on the company that sends them out. Consistency of tone and message throughout the document is important. Putting together a complex bid document often requires input from several people or teams, resulting in a patchy, sometimes confusing message – something that an impartial eye can detect and correct. A freight bid is a communications tool. It is designed to clearly capture the scope of the company’s freight operations. This includes:

a) Shipment tendering process

b) A clear description of the freight

c) Hours of operation

d) Packaging

e) Appointment process

f) Loading and unloading operations

g) Required transit times

Is the bid a sloppy, hastily prepared document to achieve a “quick fix” or has the shipper taken the time to prepare a well-organized, complete, accurate document?  Additionally, has the shipper shown the care required to project a professional image?

2. A Freight Bid is a Sales Tool

Another key element of a freight bid is the requirement to sell carriers on the desirability of the shipper as a valuable, trusted business partner. Are the objectives and timelines clearly stated? Are they realistic? What is the bid award process? Does it appear fair? Is the bid process simply an exercise to reduce the incumbent’s rates?  Be sure to include any background, accomplishments, quality, or service awards that enhance your company’s stature as a desirable and professional business partner.

3. Carriers are seeking Shippers that have Efficient Operations

As carriers read the bid, they are trying to determine if they can make a satisfactory or superior profit by moving the freight. Specifically, they want to know:

a) How do the volumes and frequency of shipments fit with their operations?

b) How quickly can the freight be loaded and unloaded?

c) Will their drivers be detained and thereby restrict their hours of service?

d) Are the lanes profitable?

e) Can the freight be used to create round trips or continuous moves?

f) Is the product packaged safely and is it subject to damage?

g) Can the freight be double stacked?

h) How quickly will they be paid?

4. Is the Shipper looking for Carriers during Difficult Times or is it seeking True Long-term Partners?

We all know that somewhere in the future the pendulum will swing over to the shipper again. Will the Shipper then look for the lowest price carriers or will they stay with the carriers that helped them during a difficult time? Is the company willing to sign multi-year contracts or is this a transactional situation where they are simply seeking a cheaper, temporary alternative to the spot market? The nature of the relationship should be spelled out in the bid. If it is not stated, this is signaling to the carriers that they may be better off supplying their capacity to their current, more committed customers.

5. Are Carriers being provided with the Data they need to Prepare a Quality Bid?

Is there enough data upon which to prepare a quality bid? Is the mode, weight, transit time requirements and product description and/or freight class spelled out for each shipment? Is there enough historical data upon which to discern seasonal shipping patterns?

Garbage out may lead to garbage in. A poorly constructed bid may “turn off” quality carriers. Here is a simple fact – some companies become known for the quality of their documents and others for their lack of quality. In times of high service demand (when carrier pricing resources are in limited supply) bids simply get ranked by priority based on profit potential, goodness of fit and quality of the document. RFPs are like the resumes of people looking for work – they must check all the boxes of attractiveness to get the right attention.

Moreover, if the data submitted to the carriers is not accurate and complete, the bid responses will contain incorrect rates. The carrier may withdraw the proposed capacity and rates in a matter of weeks after the bid awards have been made.

If you need help in preparing your bid, please contact us. We have been conducting these projects successfully for 16 years. We would be happy to assist in preparing and/or executing your bid or freight management project.

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