Until fairly recently, one of the biggest challenges that Full Truckload shippers faced was the practice of committing to twelve-month carrier contracts without knowing what volumes, capacity or rates would be as the year unfolded. A dilemma even when FTL market conditions are more stable, the volatility of the last twenty-four months has proven that a traditional Request for Proposal event is an exercise that inevitably leads to paper rates and load rejections.
With barely enough time to catch their breath from 2021, shippers are now faced with yet another year of uncertainty in the U.S. Full Truckload market. While capacity and pricing will be among the “Wild Cards” in 2022, shippers that execute once-a-year RFPs can be certain that the rates they negotiate in February will be out of date by April, that volumes and capacity in specific lanes will continue to change, and that Route Guides will soon be obsolete.
Once-a-year RFPs aren’t the best in the long run
In retrospect, yearly RFPs were never practical, and not just because the results were outdated almost as quickly as they were agreed upon. For reasons that include the limited access that shippers have to overall capacity, the length of time it takes to execute an RFP, and the considerable administrative burden that consumes human resources, the “One and Done” approach to RFP management was never an optimal exercise for shippers or carriers.
“the ‘One and Done’ approach to RFP management was never an optimal exercise for shippers or carriers.”
To be truly effective, shippers need to continuously rebalance their FTL programs during the course of a year by aligning their needs with prevailing market conditions. Ideally, the best way to do that is to conduct a series of “Mini RFPs” or “Mini Bids” covering shorter time periods that are, by definition, more sensitive to a shipper’s actual volume, the capacity of carriers during different times of the year and the rates that those carriers will not only offer, but honor.
Justifiably, the shipper’s response to the above scenario should be, “How am I supposed to conduct multiple RFPs per year when doing one bid takes so much time and effort”? Not only is this a fair question, but there’s never been a reasonable response that could be offered. That is, until the launch of the Dynamic RFP within the Emerge Freight Procurement Platform.
By using Emerge’s Dynamic RFP, shippers can design and execute as many RFPs in a year as their businesses require. Whether a company is bidding out ten lanes or a hundred, features that include easy-to-customize rate templates, centralized award management, and automated contract execution allow users to carry out an RFP in a matter of days, as opposed to months.
While the speed of execution is essential to running Mini Bids, of equal value is the expanded access that shippers gain to more than 35,000 pre-vetted carriers on the platform. Compared to manual bids where maybe twenty FTL providers are invited, the number of carriers that can respond to an invitation via the Emerge Freight Procurement Platform is much greater, thus giving the shipper a broader representation of what capacity and rates are available in a given lane.
When you think about it, the more carriers that respond to lanes included in a Mini Bid, the closer the end result comes to resembling a lane-specific index of the prevailing rate at that moment. Of course, non-price factors such as the carrier’s fleet size and the number of company drivers are definitely important, but the ability to award bids based on responses from a vast pool of carriers, in real-time, is what really helps shippers to rebalance their volume needs throughout the year.
In addition to the above features, the Emerge Freight Procurement Platform allows shippers to further customize Mini Bids by deploying its “Scenario Building” capability. For example, and apart from identifying carrier service requirements down to the lane level, shippers can use the platform’s algorithms to stipulate that a certain amount of volume be awarded to the lowest bids, or more specifically, a Woman-Owned Business, a minority carrier and/or a veteran operated trucking company, etc.
In the spirit of offering a fully integrated User Experience (U/X), the Emerge Freight Procurement Platform goes well beyond conducting Mini Bids. In fact, shippers can enhance their ROIs by making use of capabilities that include the housing of up-to-date Route Guides, load booking, Bill of Lading generation, GPS tracking, electronic POD, and an automated payment mechanism. Given this integrated approach, there is no other tool in the market that offers such a rich procure-to-pay experience.
Testimony to the above claims are the more than 1,000 Mini Bids that have been carried out on the platform, each of which proves that Emerge has changed the FTL procurement experience in three fundamental ways:
Greater accuracy of committed volumes.
When a shipper issues an RFP for a shorter time frame, their volume projections are more accurate. Because carriers allocate capacity based on volume commitments, the more precise the figures, the better it is for both shipper and carrier.
Access to more capacity.
With a traditional RFP, a shipper might be able to manage twenty bidders. No longer constrained by time or bandwidth, Platform users receive offerings from a limitless number of pre-vetted carriers, thus maximizing their access to capacity.
Rates from a small pool of bidders are not a reflection of true pricing dynamics. The combination of the platform’s ability to conduct Mini Bids over shorter time frames with its access to greater capacity means that shippers can be sure that selected rates are a reflection of current market conditions.
At the end of the day, the essence of the Emerge Dynamic RFP is that it allows shippers to move away from a once-a-year, event-based RFP mentality, to an approach built on a continuous process of rebalancing volumes with carrier capacity and rates. With benefits that are attractive to shippers and carriers alike, FTL shippers can quickly execute win/win Mini Bids without ever losing a beat or their balance!