5 ways to getting the freight bidding process right

If you’re feeling lost and frustrated over the ever changing freight bidding process, here are a few tips on how to get the bidding process right and how to structure your bidding proposal for success. 

The pandemic has shown how the supply chain can be easily crippled by market fluctuations so it’s important to find a reliable carrier that can help you withstand volatility and market changes. 

Here are five tips on how to get the freight bidding process right so you can come out on top with a fair freight contract. 

Create a proposal with the right details 

A freight bidding proposal (or RFP as it's known in the logistics management industry) is a document that puts together all the information a carrier will need to know before deciding to work with you. The document should clearly outline your shipping requirements such as what you are shipping, the frequency and volume, and estimated delivery times. 

Once the document is completed and finalized, it is then sent out to a list of carriers who can review the file. If all looks good, they can proceed to bid on the project or negotiate with you on details. If they flat out reject the proposal, keep in mind that your RFP may contain too many unreasonable requests or not enough information for them to understand your request. 

Do your market research before submitting an RFP

Before you put together a proposal do some research on your competitor’s bidding strategies to see what are the industry standards to help manage expectations. Getting a strong grip on industry standards is key when it comes to the negotiation phase (more on that later). 

You should also gain insight into your carrier’s profit margins and bottom lines. That way you can avoid creating a proposal that is automatically rejected based on unreasonable costs which won’t be beneficial to the carrier. 

Emphasize your competitive advantage 

Stand out by making carriers aware of what makes your business special. Some carriers are looking to diversify the type of freight they carry to help mitigate costs or want to monopolize specialty services so they are seen as a leading carrier in that space. If they see it as a mutually beneficial partnership, the more likely they are to work with you and possibly even give you a better freight rate. 

Keep an open mind and be flexible 

Chances are you may not get your number one carrier pick since they are handling a lot of requests during bidding season. Response rates may be lower than you expected. But you may discover throughout the process that other carriers offer services or rates that are more aligned with your freight spend. 

While RFPs are still used in the industry, the popularity of mini-bids is also on the rise. To deal with market volatility and high shipping costs, an alternative to signing long term contracts with carriers is reaching out for mini bids. Mini bids are short term contracts (can range from weekly, monthly or yearly) and can get you a lower than market rate. This allows shippers to save and be more nimble about their logistics plan. 

Mini-bids are usually sent out when their primary carrier is faced with a set of challenges that prevents them from fulfilling a delivery. A shipper can then put out a last minute price request to carriers for a short term contract to ensure the package arrives on time. Carriers who are looking to fill their loads may accept a mini bid if it benefits them so all parties can win. The cost savings benefits of mini bids should not be overlooked. 

Expect to negotiate 

In some cases, a freight broker is used as a middle man between the shipper and carrier. The broker can help the shipper and carrier reach an agreement so the shipper finds a reliable partner and the carrier receives a promising contracting rate. 

However, a broker usually favors the carrier over the shipper. If you're negotiating for the company, some key information you can bring up if they counter your proposed pricing is stats on industry standard pricing or emphasize that you would like to create a long term partnership so they know you would be invested in the relationship. 

It’s important to get it right during freight bidding season so you can find the right carrier. Whether you plan to submit an RFP, rely on mini-bids or do a combination of the two, it’s important to clearly communicate all of your shipping requirements so a carrier understands all your wants and needs. 

We hope these 5 tips help you stay within your budget and help you get the contracted rates you’re looking for. 

If you think a Transportation Management Software could be the next step for your growth or want to learn more about how we can help your business, book a demo below with one of our Rose Rocket logistics experts –  as the #1 Rated TMS, we’d be happy to help you learn more! 

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