There is no I in RFP: Here’s how Shippers and Carriers can both win this RFP season
It’s a shipper’s responsibility to put a carrier in a position to win. Just like a football team, the players need to be bought into the coach’s system otherwise they won’t run their plays confidently. In logistics, a carrier needs to be invested in providing good service to their shippers otherwise they may not run their lanes with any urgency. Developing this level of commitment is dependent on a shipper’s ability or willingness to pay them a fair market rate and provide accurate, real-time information.
Demand hasn’t just gone up, it’s changed. There’s been massive consolidation of e-commerce distribution centers that all rely on Full Truckload. When analysts say there is a general decrease in supply, they aren’t necessarily accounting for the fact that it’s compounded by this unprecedented increase in demand for FTL.
This is a reflection of how fast so many businesses are growing; consumption has exploded as people spend more time at home. For many businesses who’ve had to communicate these rapid developments in demand to shippers in basically real-time, it’s been a crash course in how essential real-time visibility is. Carriers need that same level of visibility from their shippers. Shippers can and should continually modify volumes, lanes, and requirements by engaging carriers with more frequent requests for prices through short-term cycles that better reflect what’s going on–now.
To start, monitor your lanes and don’t let contracted lanes fall 20% below spot market rates. Learn what the acceptable gap is for each of your carriers on each of your lanes. At which point are they no longer bought into your system? What we know for sure is that the further below the spot market rate it falls the more likely you are to have service failure. Is it 10%, 15%, 20% before you start risking service failures?
RFPGuide is constantly monitoring how far your contract is below the spot market. It notifies you to address the carrier or ignore it based on special circumstances. If it’s a new lane, and you’re seeing your lane is spiking, you want to get ahead of that. You can either eliminate the lane now that you understand how volatile it is or you should put that lane back out to bid and you can do that very easily.
People are tired of hearing that the RFP process is broken, shippers and carriers want transportation planning that works. Run a dynamic bid cycle without increasing your workload. Providing carriers with real-time information and the ability to adjust their rates slightly to ensure solid service levels will create a situation where everybody wins. Shippers will pay a little bit more on contracts, but you’ll be saving on the spot market and getting better service. Check out RFPGuide.com👇
Transforming the future of freight, Loadsmart leverages artificial intelligence, machine learning and strategic partnerships to automate how freight is priced, booked and shipped. Pairing advanced technologies with deep-seated industry expertise, Loadsmart fuels growth, simplifies operational complexity and bolsters efficiency for carriers and shippers alike. For more information, please visit: https://loadsmart.com.