Freight Carriers - How to Achieve Success with Freight Bids – Part 2

In my last blog, I outlined a set of tips to help carriers achieve greater success with Freight Bids. Here are a few more.

Put your best foot forward early in the process

We observe both incumbent and new carriers hold back on their pricing to see where they need to be at the end of round 1. The risk with this approach is that the company may not survive round 1. If you wish to maintain an existing account or secure a new one, go for it. Shippers understand that carriers need to earn a reasonable profit. But carriers that end round 1 near the bottom of the rankings are mostly likely to be dismissed early.

Submit Your Bid on Time

Assign the task of preparing your company’s bid response early and make sure you submit a well thought out bid on time. Some companies treat freight bids like some students treat term papers. They look at the bid in the final few days and then rush to meet the deadline. This can lead to problems.

Check the Math

Many companies forward the “number-crunching” part of the bid to a junior Pricing Analyst. The bid may or may not be reviewed by a more senior Pricing Manager (i.e. Director of Pricing) before it is forwarded to the shipper or the shipper’s negotiating agent. Sometimes the bid will contain mistakes that can be attributed to a lack of attention to detail or a misreading of the bid. In some cases, the bid submission contains errors in arithmetic. Check the math in your bid before it is sent to the shipper.

Communicate Your Company's “Value Proposition”

In certain bid packages, there is a group of questions that address a broad array of variables (i.e. on time service, claims ratio, operating ratio, size and age of fleet etc.). The answers to these questions provide a good insight into the carriers’ ability to serve the needs of the shipper. Carriers are encouraged to develop a “boilerplate” proposal that can be customized to the requirements of each shipper. Use this document to present a compelling story on why your company can best meet the needs of the shipper.

For example, if you have broader direct service coverage in the province of Quebec, make sure you tell the shipper. If your on-time service performance or claims ratio is superior to industry standards, don’t be shy to mention it. If you aren’t sure what the company is looking for, send the shipper an e mail and ask some questions. If you wish to be successful, do your due diligence and present a bid response that directly addresses the needs of the shipper.

Be Prepared for Multiple Rounds of Negotiations

In many bids, there is a requirement for multiple rounds of negotiations. It is only after the bids are in that opportunities to negotiate with selected carriers become apparent. Volume discounts and negotiations on accessorial charges (including fuel surcharges) may be left to the negotiation rounds. Those carriers that take a position of arrogance or inflexibility risk being left “out in the cold.” We encourage carriers to think through their “end game strategy” and be prepared to negotiate a “Win Win” contract with a desirable shipper. Be professional; don’t spread unfounded industry rumors and bad mouth the competition.

If you are Awarded Business, Focus carefully on the Implementation

During the early stages of the process, the carrier’s Pricing and Sales groups are most engaged. Once the business is awarded, it is essential that the Operations team gets directly involved. This is the time when the Terminal Manager or the Director of Operations should accompany the Account Manager to meet the prospective client. There should be a clear understanding of the shipper’s requirements (i.e. pick up time, equipment required for pick up, number of trailers in the yard, cut off times etc). There are carriers that make it to this stage only to “blow the account” by not meeting the shipper’s service expectations.

Since this is a period of vulnerability for the Transportation Manager, a carrier that falls down may cause this individual to run back to the incumbent carrier and negotiate a revised pricing proposal. All the time and effort that was devoted to the preparation of the bid, selling the shipper on the value of the company and negotiating the rates will be lost if the shipper loses confidence in the carrier at this stage.

To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).