Over the years, it’s become very common for FTL shippers to run both a yearly Request for Information (RFI) and a Request for Proposal (RFP) process with new and incumbent carriers.
But, with so much disruption in FTL markets, many shippers are reevaluating the two-step process traditionally used to carry out RFIs and RFPs.
With a great deal of carrier-specific information available online, some shippers are wondering — is it even necessary to conduct an RFI? From an RFP standpoint, others may also be starting to question yearly bids and are seriously considering six month, or even quarterly pricing cycles.
While the shipping landscape is ever-evolving, the need for RFIs and RFPs remains constant and necessary. As every capacity provider’s business varies — effective RFPs guided by insights from an RFI are crucial to the contract procurement discussion. In recognition of this need, we will be covering how to get the most out of your RFI & RFP efforts. We’ll cover what each activity accomplishes and how they complement each other, and insights on how shippers can take advantage of the tools at their disposal to run a tight RFI/RFP process and make decisions based on relevant and timely information.
The FTL Request for Information & Request for Proposal: What’s the Difference?
One of the great things about understanding RFIs and RFPs is that their respective names state exactly what they are. A “Request for Information” or RFI, is just that — a proactive outreach from a shipper to a carrier or broker that asks for specific information about their company. Equally evident, a “Request for Proposal” or RFP, is a written invitation from a shipper to a carrier or broker soliciting rates and service levels on specific FTL lanes.
Prior to the arrival of online load boards and the launch of sophisticated Digital Freight Marketplaces like Emerge, the RFI/RFP process was a predictable undertaking. Basically, shippers sent RFIs to carriers in search of answers to “cookie-cutter” questions like corporate structure, years in business, number of company drivers, power units and trailer count and geographic service concentration.
After reviewing RFI submissions, the shipper then pared down a list of current, as well as potential carriers, and sent out the RFP. A painstakingly long process, many shippers would take months to go through the process of analyzing, comparing, negotiating, awarding and implementing lane-specific awards. Independent of that exercise, many shippers would also implement carrier-specific Routing Guides.
Best Practices: Sequencing RFIs & RFPs in the “Age of FTL Disruption”
Given that most everyone in the FTL world understands the difference between an RFI and RFP, the real question for shippers is how to use these tools in a way that addresses all of the disruption and changes that Full Truckload shippers, carriers and brokers have experienced over the last few years.
Ideally, when RFIs and RFPs are sequenced correctly, most of the details around a carrier’s capabilities will be understood by the shipper well before an RFP is sent out. Given the importance of this RFI-to-RFP sequence, here are some suggestions from Emerge on how shippers can create RFIs that address the realities of today’s FTL environment:
Don’t Treat an RFI as an Event; Make it an Ongoing Process:
Remember, there’s no rule that says an RFI must or can only be done once a year. Given such rapid changes in market conditions, it might not be a bad idea to reach out to one or two potential carriers a month and ask them for updated information on their companies. Bearing in mind that shippers are moving towards multiple RFP’s per year, this type of RFI cycle makes even more sense than the old “once a year” approach.
Supplement RFI’s with Your Own Online Research: Although it is definitely up to the carriers to make sure that a shipper is up to date on their company, it’s also easy for shippers to supplement RFI submissions with their own research. Whether it’s via a carrier website, Zoom Info or some other source, shippers should supplement RFI’s with proactive market research of their own, on an ongoing basis.
Develop Relationships with High Potential Carriers Throughout the Year: When you think about it, RFIs are designed primarily for carriers that have yet to do business with a shipper. Ideally, the carrier will use the RFI to build credibility with a shipper and upon submitting an RFP, hopefully, be awarded loads. As part of that “feeling out” process, shippers should develop professional relationships with high potential carriers, too. In addition to an RFI/RFP, this “know them before you need them” approach will pay dividends when it comes time to actually move freight.
Building an RFI That Complements Your RFP
The ideal RFI solicits details that address FTL market conditions while setting the stage for a high-impact RFP. This in mind, here are some questions to consider asking carriers during your next RFI:
Case Studies that Illustrate How the Carrier Manages Unpredictable Market Conditions: Given the unpredictability of current FTL market conditions, shippers should ask for examples of how the carrier proactively works with customers to meet service levels and rates.
Tender Rejection Statistics: As part of the overall suite of Key Performance Indicators (KPIs) that a carrier uses, shippers should ask for data on how many loads a carrier rejects in specific lanes, by time of year.
Fleet Management Technology: How carriers manage their own assets (power units and trailers) directly impacts the shipper, so a request for details on fleet management technology is definitely appropriate.
Driver Recruiting and Retention Efforts: Everybody knows that one of the biggest constraints faced by FTL carriers is driver recruiting and retention. Because this factor directly impacts service, shippers should look into how carriers recruit and retain drivers. A proactive approach to retention and hiring is a great sign of business health!
ELD & HOS Management: Closely related to fleet management and driver retention, it is important for shippers to learn as much as possible about how carriers use Electronic Logging Devices (ELD) and Hours of Service (HOS) technology to the benefit of all parties involved.
Incentives for Limited Dwell Times at the Shipper’s Facility:
Surveys show that one of the biggest complaints of FTL drivers is dwell time at a shipper’s facility. Given this fact, it can’t hurt to ask carriers if they offer pricing incentives for quick turnaround times.
It’s not just a buzzword — the sustainability of the FTL ecosystem must be top of mind for all market participants. Shippers should show their commitment by requiring related information in an RFI.
Depending on the nature of a shipper’s merchandise, cargo security can be a big deal. Even if a shipper’s goods aren’t highly susceptible to theft, details on this question say a lot about a carrier’s internal discipline.
Route Guide Preparation & Implementation Process:
Preparing and submitting an attractive RFI & RFP is one thing, implementing the business and handling it per a Service Level Agreement (SLA) can be an entirely different story. Given this reality, shippers must be sure to ask for examples on how a carrier implements new business.
In an FTL market that is characterized by a state of “permanent disruption”, there’s no doubt that there’s still a place for both RFIs and RFPs. While shippers definitely need to ask traditional questions about fleet size, service coverage etc., this two-stage process must also seek information that addresses broader considerations about market changes that are here to stay.
By designing an FTL Request for Information using the above tips, the RFP process can be conducted in a more informed fashion, with an emphasis on pricing, service levels and relationship management.