Shippers want a significant reduction in the stress of logistics. But what shippers want and what’s available do not always align. With that in mind, the trucking RFP has come into play as a more significant undertaking for 2021 contracts as the freight market saw volatility in 2020 on the spot market due to historic tender rejections and volumes adding to increased prices. A confident, data-driven trucking RFP undertaking can make a big difference in freight spend. Why? It’s because enterprise shippers are turning to new intelligence tools, such as SONAR SCI, to conduct a freight spend analysis to maximize contract freight use and allocation. And despite the current challenges, carriers are already looking for ways to augment their capacity through increased access to freight broker resources and beyond. According to Matt Leonard of Supply Chain Dive:
“Demand for trucking freight is being driven by strong consumer spending and a manufacturing industry that’s seen growth for five straight months. Trucking companies have been open about their capacity issues.”
Now, that report is nearly two months old. Thus, shippers need a way to tap those plans for meaningful improvements in shipping today. And that amounts to a renewed trucking RFP process. Since a return to strong contracts and loyalty between shippers and carriers is essential, let’s look at a few things that shippers need to know to get the most from contract freight truckload RFPs.
Shippers know the value of undertaking a trucking RFP. But what is the true purpose of an RFP? Does it serve carriers or shippers, or is it something else? Here’s the truth. It’s to give shippers and carriers the opportunity to go to the market and get a feel for the available service and price options available right now and for the foreseeable future. Bids often remain focused on high-traffic freight lanes above all else. That ensures freight managers get the chance to lock in capacity and load levels before a disruption occurs in their specific lanes and markets. That amounts to carriers receiving more preemptive planning strategies, such as knowing when to hire more drivers, order more trucks or take other steps.
A trucking RFP is most effective when sent to diverse and varied supply chain networks. A trucking RFP is equally valuable to focus on expansion with a range of origin and destination (O/D) points. Securing great freight rates, more shipping modes and a healthy range of O/D pairs will attract more RFP bids and competitive offers, regardless of trucking freight contracts’ negotiation time.
Shipping managers who have maintained strong relationships with carriers during these trying times will be in a better position to recover and optimize freight assets. These strong partnerships allow shippers to ramp back up quickly and can handle loads and transports more easily after the turmoil 2020 has caused the industry. The trucking RFP helps foster relationships that can last all season long and are the framework for mutually beneficial partnerships. Shippers who left their faithful contract carriers in favor of the short-term solution of spot freight market providers before the pandemic found that it failed them in the long run. Shippers must support carriers, and the reverse is equally true. That brings up the need to stay close to core carriers, focusing on long-term relationships over short-term gains.
Flexibility and a willingness to compromise are essential to surviving a normal year in the freight and shipping industry, but 2020 was no normal year. Volume estimates made last year have obviously not panned out in most markets right now. Shippers and carriers that agreed to a trucking RFP contract have had to adjust to compensation changes, while also preserving a fair and honest working relationship. Dumping contract carriers for spot market options may appear to increase carrier revenue and boost the chain here and now. But it’s often not a smart choice in the long run. Honoring the trucking RFP contract, set up before shutdowns and load restrictions and putting out fair, honest bids will benefit everyone and enable adaptability to market conditions. Plus, these processes should be transparent and clear, using real-time freight data and not hope to make the most proactive, lucrative decisions as an enterprise shipper.
Shippers and carriers have taken a beating throughout 2020. As the industry readies for another set of urgent vaccine shipments, enterprises must turn to more trucking RFPs to find, maintain and deliver on business-to-business alliances. That’s the only way to create an enduring freight management strategy. Request a FreightWaves SONAR demo now to learn more about how to apply freight data in routine and any new trucking RFP. Or simply click the button below.