Freight bids are becoming increasingly popular as a mechanism to negotiate freight rates and service. Initially seen as a temporary initiative by shippers to lower their transportation costs during the recession, they remain very much with us...
Freight bids are becoming increasingly popular as a mechanism to negotiate freight rates and service. Initially seen as a temporary initiative by shippers to lower their transportation costs during the recession, they remain very much with us four years into the economic recovery. Even companies with as little as $50,000 in annual freight spend are putting their transport business out for bid.
I believe freight bids are here to stay. Rather than wishing for them to go away, I think the best approach is for motor carriers to learn how to best deal with them and to encourage shippers towards a better RPF process.
To that end, we assembled a panel of leading shippers and carriers at our recent Surface Transportation Summit and dug deep into the subject of RFPs. I encourage you to read the transcript in the current issue of sister publication Motortruck Fleet Executive and watch for highlights of the discussion in a series of TMTV episodes over the next few weeks.
I also applaud Jacquie Meyers of Meyers Transport, Michelle Arseneau of GX Transport and Bruce Jantzi of Erb International, who tackled the thorny issue at our Surface Transportation Summit.
They didn’t mince words. They called it as they saw it.
Although RFPs can be effective if shippers take the time to properly vet the carriers they allow into the bidding process, investigating the carriers’ operations and processes and meeting with their executives to ask and answer questions, too often it seems RFPs turn into an impersonal, multiple round attempt to simply drive down pricing.
As Meyers, whose remarks made her an instant industry celebrity, pointed out: the carriers who do “win” these bids are not actually winning. It simply means they are the cheapest or close to the cheapest and giving something up – Driver training? Safety? Security? – to be the cheapest.
All three affirmed the only action that makes sense in dealing with such RFPs: Refusing to participate if they seem structured to reduce decision making down to price.
Meyers issued a call to action to both shippers and carriers.
To shippers, she urged “Please invite us to the table. We want to come to the party. Let us be a strategic partner.”
To carriers, she said “When invited to participate in the tender process, start the dialogue. Talk about how you can impact their bottom line without being the cheapest. Invest in collaboration, bring your A-team and find ways to do better.”