RFP bid season is an annual ritual, but 2015 presents a unique opportunity for getting on a shipper's routing guide. Shippers are looking for capacity, high-level service, and predictable costs, but the capacity crunch isn't going away anytime soon. That's leveled the playing field in a lot of ways.
While the shipper may have relationships with a number of large carriers, a mid-sized broker can represent access to thousands of small carriers and owner-operators who otherwise wouldn't be involved in the bidding process. At the 2014 Retail Industry Leaders Association (RILA) conference, there was a special session on capacity in which shippers explained how they turned to brokers during this past winter's storms to gain access to small carriers.
Brokers might be hesitant to commit to a large volume of low-margin business, but with the right strategies and tools, a mid-sized brokerage can still get in the RFP game. Plus the predictable freight can make you popular with carriers.
Here are three keys to help unlock success in the upcoming RFP bid season:
Talk to your repeat/regular customers
If there's a shipper you do business with on a regular basis, offer a long-term contract and ask to bid on their RFP if they have one. You can use the process to demonstrate how you understand their needs and are best able to support them.
Research the rates
Focus on your core strengths. If the shipper is a small, regional outfit and you have the captive capacity, you might be well-equipped to cover the whole RFP.
You can analyze the shipper's RFP lane by lane using DAT RateView, which allows you to benchmark your pricing index against the prevailing market rates. With detailed information on both the contract and the spot market rates for tens of thousands of lanes -- all based on actual transactions rather than bids -- you can find which lanes in the shipper's RFP often have backhaul rates.
You can also submit a Mult-Lane Request and research rates for every lane in the RFP on a single spreadsheet.
Submit a Multi-Lane Request to research all the lanes in an RFP at once.
Be sure to account for seasonality in your pricing, too. With a 13-month rate history, you can research the price fluctuations in any given lane. If you lock in the trucks year-round for those seasonal routes, you can bid the year-round rate and stay profitable.
Research a lane's seasonality by looking up a 13-month history of contract and spot market rates in DAT RateView
Structure your bid to achieve your goals
If a lane in the shipper’s RFP fits well with your business, you might bid between the contract rate and the low end of the price range, getting predictable freight volume with a moderate profit target. For the lanes that don’t fit as well, you may want to bid higher and end up lower in the shipper’s routing guide. You don’t want to underbid asset-based competitors, but with regular, well-priced freight, you can increase carrier loyalty while also also improving the relationship with your customer.
A well-structured bid can still win business even if it doesn’t result in a contract. It’s a chance to strengthen your relationship with a shipper and make a strong impression, and an attractive bid that doesn’t win the contract might still win exception freight on down the road. See “Win by Losing: How to Respond Effectively to a Shipper’s RFP” for more info on how a losing bid can still be a good thing.
Categories: Best Practices and Benchmarks