No more ad hoc freight bids

June 16th, 2009

Many companies approach freight bids on a lane-by-lane or ad hoc basis; however, many of our clients are seeing 5-10% savings in their transportation spend after undertaking comprehensive freight bids on their entire transportation activities.  The process is intense, but generates payback in less than 2 months on the cost of running the comprehensive freight bid project.

Conducting a comprehensive freight bid begins with a request for proposal issued to qualified carriers for all inbound and outbound shipping lanes.  Carriers bid on the lanes of their choice, and provide their price and capacity per lane (frequency of deliveries per day or week, number of trucks, truck size, etc…). This data is compiled and each carrier is ranked by shipping lane.  The carriers are then informed of their ranking and relative distance behind the top ranked bid. 

In a second bidding round, all carriers have the opportunity to tighten pricing in order to increase their chance of winning lanes.  The number of rounds conducted is determined by the needs of each individual client; however 2-4 is usually sufficient. 

Once the rankings are finalized, a routing guide, by shipping lane, is generated.  Weekly tracking reports going forward ensure that transportation managers adhere to the routing guides and that carriers are delivering the promised capacities. 

Entry Filed under: Transportation