Loadsmart is a technology company that uses artificial intelligence to analyze data, providing shippers with insights into their business operations. We help shippers reduce cost and operate more efficiently by seeing how their goods move across their network and then providing recommendations and guidance. The more you move with Loadsmart the deeper the data analytics.
Logistics technology has fast evolved from a way to automate simple manual tasks into powerful tools for improving strategic decision-making across the supply chain. The most impactful example of this has to do with the ability of technology to improve the way companies optimize shipping modes, carrier selection, and rates.
Shippers enabled with the right technology have moved beyond the outdated methodology of annual RFP’s and even the more current trend of “mini-bids” to ensure both capacity and market-appropriate rates to achieve all the benefits of true dynamic pricing.
Mini-Bids Upset RFPs
RFP’s, RFQ’s, RFI’s, RFX’s – whatever you call them – have been around forever. They represent an easy way to gather rates but do little to actually get loads covered. Every shipper knows a low rate is meaningless if the carrier cannot provide a truck to pick up the shipment when it’s needed. And no one can realistically expect a rate submitted 10 or 11 months ago to still be good. Carriers are not in the business to lose money.
On the flip side, shippers may find rates from a past RFP to be too high. Making volume commitments to carriers at above-market rates is something all shippers need to avoid.
These problems have always existed but have become glaring thanks to the extreme market conditions of the past twelve months. Lately, mini-bids have become a stop-gap strategy for overcoming the limitations of the RFP, but they have issues as well.
Mini-Bids Cinderella Story Comes To An End
Running more frequent RFP’s throughout the year helps by providing more current pricing that carriers will honor and shippers feel are fair and alleviates the problems to an extent.
Although more timely and current, running mini-bids takes a lot of work. Each bid requires time and data that need to be analyzed and built into systems, rate tables, and routing guides. And after all that, new partners need to be trained to become familiarized with your products and facilities.
In the end, shippers who rely too much on mini-bids will still have loads rejected and be stuck with outdated rates more often than not.
Dynamic Pricing Is The Real Champion
The ultimate goal for shippers is to keep their pricing current without any disruption in service. Dynamic pricing provides capacity with the confidence that the rate is current and market-appropriate on every shipment. Shippers who employ dynamic pricing know they can tender their load once and get the best possible rate – and have the confidence the decision was all based on clean short-term data and actual capacity. They also know the provider is already vetted and will not require time for on-boarding.
Tech-enabled shippers improve not just their day-to-day operations but benefit from better strategic decision-making as well. Dynamic pricing makes it easy to understand transportation costs of what-if scenarios, such as for specific lanes, from certain origins, or different modes based on the business need. Having this level of flexibility and accuracy is a good way to validate the location of distribution centers, 3rd party warehouses, as well as model shipping costs to/ from customers and suppliers.
The limitations of RFP’s and mini-bids should be clear to you as a shipper; visit www.loadsmart.com to see how dynamic pricing can overcome them.
We are industry veterans and data-scientists using innovative technology to fearlessly reinvent the future of freight. As the ‘nerds of logistics’, we seek intelligence in data to solve deep-rooted inefficiencies in the industry. We give shippers, brokers and carriers access to our data connections (linking supply and demand) and suite of award-winning solutions to strike the perfect balance of cost and service. We’re creating a more efficient and environmentally responsible way to move more with less. For more information, please visit: https://loadsmart.com