Best Practices for Shippers Evaluating Current Carrier Procurement Strategy

Carrier Procurement Strategy

2018 was a volatile year. Spot quote prices spiked significantly and had many shippers scrambling for capacity. As a small to medium sized shipper, when evaluating your carrier procurement strategy for 2019, consider the mix of contractual and spot market exposure you may have with cargo.

Ultimately, conducting a bid doesn’t have to be overwhelming, if you keep a few simple principles in mind. In order to be successful, it is critical to have a clear idea of what you want the outcomes to look like, consider the timing, communicate specific requirements and freight characteristics and to utilize the right resources.

Timing

Timing can be crucial as rates fluctuate by season. Ideally, the best time to send a Request for Proposal (RFP) is during bid season, which is between November and March. Bid season is typically the time period when customers are wanting to secure their rate for the entire year or longer. It is best to get ahead of the game before the summer months, since the market is tighter during this time. During bid season, capacity has loosened, and the heavy shipping period is over, so shippers can focus on their transportation strategy.

Characteristics and Details

The shipper must provide all the pertinent information to ensure they are receiving the best solutions. Be conscientious of hours of service and the impact that electronic logging devices (ELDs) have on carriers to be compliant and be upfront about dwell time. If information is left out and if there are any miscommunications, it can alter the budget and the relationship with the carrier.

Therefore, it is essential to obtain as much detail about the freight characteristics as possible and any specific accommodations. This includes the required equipment such as dry van, flatbed or temperature-controlled units (TCU). It’s also important to include cargo value of the shipment, if the product is hazmat and if the shipper and consignee requires appointments for loading and unloading.

Other necessary details include the start date of the new proposal, the volume on each of the lanes and if there is any seasonality to the shipments. Provide fuel and accessorials that is needed, and which mileage program is typically used, such as Rand McNally or PC Miller. Since there are different versions of mileage programs, it’s important to not leave out that information.

The Process

Start out with setting a timeline for the bid process and provide that information. Include when the bid is due, negotiation periods and when the award will be implemented. During the review period, be aware that price isn’t always the only factor. Look at if a carrier can provide capacity, if they will be there for the long run and if they can they offer you solutions to fill all your transportation requirements.

In short, choose a provider that will not only help manage cost, but will get capacity when you need it and can leverage multiple modes of transportation to accommodate your everchanging business needs.

Finally, provide the carrier with accurate feedback. This will allow them to analyze and adjust your solutions if possible. The more accurate the feedback, the better the chance of healthier negotiations.

Resources

With the driver shortage not coming to an end anytime soon, having a strategic transportation provider with both asset and non-asset solutions is a differentiator. A total transportation solution provider like Werner can offer many options to accommodate various logistics needs. Allowing brokerage, intermodal and asset divisions to price the bid creates more opportunities. Not only does it open the door for more capacity, but for more competitive solutions as well.

Ultimately, utilizing a company with asset and non-asset solutions can be valuable because they know carriers, rates and they understand the industry. A solution-provider like Werner Logistics also uses industry-leading technology. The latest technology can find the best network fits or carrier partners, provide real-time visibility and helps manage transportation expenses.

Our team would love to help. For more information and to connect with one of our transportation professionals, visit Werner.com