We can all agree on one thing: 2020 was a volatile year for freight rates. Given the U.S. full truckload (FTL) market’s irregular nature in 2020, shippers will need to be especially detailed when executing their 2021 FTL Request for Proposal (RFP) process. With no sign of market volatility letting up, the stakes will be high as companies go out to bid for their anticipated 2021 FTL volumes.
Designed to help shippers find the best carrier partners, RFPs are essential when looking for solid, long-term partnerships. A thorough, well-planned RFP process can help shippers communicate their needs and expectations, ensuring they find the best partners to meet their business’s long and short-term goals.
To help you on your RFP journey, we’ve compiled a list of the top tips for executing a successful RFP.
Getting Ready: Timing and Preparation
Planning for your RFP can be a make or break moment, a bidder’s submission will only be as good as the detailed and accurate information you provide them. Consider the following:
Timing is everything when it comes to a successful bid, pick a timeframe in line with your transportation budget finalization. If timed properly, you can rely on real market rates to help with your budgeting. That said, most annual budgeting typically happens in Q3 or Q4 of the current year, leading to rates that reflect the current market but not necessarily the future market. We saw this to be especially true in 2020 due to COVID-19. At the very least, you will want to bake your FTL budget numbers into your RFP objectives.
Consider the seasonality of your business, and make sure your bid is prepared, issued and awarded ahead of your busiest shipping seasons. Depending on the volatility of the current market, you may want to consider rolling or “Dynamic RFPs” during extra busy times.
The key to timing a successful RFP is to run it as close to your shipping season implementation date as possible and position yourself to issue a bid with as much current market knowledge as possible, with an eye towards the future.
Your bid’s success is completely dependent on the level of detail provided to bidders. To receive FTL rates that carriers will actually honor, you need to give them relevant data, relaying information like historical data on loads, lanes and lead times for your FTL business.
Other items to consider sharing:
- Yearly, or preferably, monthly loads by lane and lead-time expectations
- Your business’s seasonal peaks
- Ship volume towards the end of a month or quarter
- Future or new volumes, and predicted forecast (subject to change)
- Any new customers, plants, facilities, etc.
Structure and Content
Determine the method you will conduct your RFP. There are many ways to do this, from traditional email and spreadsheet methods, 3rd party RFP services, and online bid management companies, to technology-based RFP platforms.
Once you choose how to conduct your bid, introduce yourself and your company to your bidders. Make sure to explain what you do, strategies you may use and the markets you serve. This will give your bidders some context to respond with a bid that balances service requirements with pricing.
Take the time to inform your bidders of what a relationship with your company would look like. Let carriers know precisely what it is they’ll be dealing with when moving your freight; while loads, lanes & lead-times are a good start, you’re going to have to provide a lot more detail to avoid uncomfortable conversations after lanes have been awarded and goods start moving. At a bare minimum, provide lane, shipper and consignee details on factors like:
- Transit time expectations
- Freight characteristics
- High volume loads
- Insurance and liability requirements
- Hours of operation
- Appointment requirements
- Driver and lumper loading
- Live load and unload
- Trailer pools
- Drop & hook opportunities
Equally as important as introducing yourself, get to know your bidders. Allow a section for bidders to introduce themselves, gaining insights into their origins, corporate culture, target markets, fleet size, technological capabilities, driver retention programs, etc. Getting this information ahead of time can greatly benefit you when you get to pricing.
If your organization has specific technology requirements, be sure to include these in a separate section of the bid. Ensure that your partners can meet your technology requirements by asking for detailed information on the bidder’s full suite of technology.
Bid Templates & Pricing Structures
When conducting a bid, it’s important to stay organized. The best way of doing this is to use the same format to conduct bids for all bidders. This will allow you to easily collect and compare.
Keep your pricing details organized, and make sure they are a clear reflection of your service needs. Here are some examples of items to look out for:
- Determine how FTL rates will be expressed (per load or per mile)
- Separate base-rates from any Fuel Surcharges
- Have two separate sections for standard (single driver) service, pricing for expedited and team driver scenarios
- Include a detailed section in the bid for ancillaries like Truck Order Not Used (TONU), Corrected Bill of Lading, Limited Access Pick-Up/Delivery, Additional Stops, Bonded Freight, Hazardous Materials, Driver Assist, Additional Labor, Layover and Detention
Tip: be sure to include a condition in your bid that states any charge not expressly shown on the bid that subsequently appears on an invoice will not be honored.
Establish Carrier Expectations and KPIs
When it comes to RFPs, you can’t manage what you can’t measure. That’s why it’s essential that you inform carriers of Key Performance Indicators (KPIs) you’ll be using to measure their performance. A few benchmarks you can use to measure include:
- Tender acceptance rates
- On-time pick-up and delivery
- Billing accuracy
- Soft metrics like customer service, relationship management and senior management advocacy
In this section, include language that references the need for a formal Service Level Agreement that is closely aligned with your Route Guide. Also, take the time to include a copy of your Terms & Conditions with the bid package.
Communication, Communication, Communication
You will have the final say on how many carriers to invite to an RFP. You’ll want to invite a number that provides a broad frame of reference for market conditions, without overburdening yourself or wasting a carrier’s time. More than anything, you want to invite a sufficient number of carriers that can service your business while honoring the rates they quote.
Once you have carriers chosen for your bid, write a digital letter to each bidder formally inviting them to the bid. In the letter, establish the timeframe of the bid, first submission dates, explicit timing of “shortlist” carriers and dates for final presentation. You can also touch on awarding dates, your implementation period and kickoff.
As a part of the bid process, you should host at least one “Bidder Forum” where all invitees can ask questions, gain clarification and make suggestions. If you choose to hold a forum, you must keep it open to all bidders and every question, along with your responses, must be published and shared with all bidders, not just the party inquiring.
In addition to a Bidder Forum, if you accept emails and phone calls about the bid from one carrier, you have to open that up to everyone. Conversely, if you may want to institute a “Quiet Period” where you won’t be discussing the bid privately with individual bidders, that policy must be universal. No matter the circumstance, fairness and objectivity dictate that all bidders be accorded the same treatment. No favorites in freight!
Conducting a successful RFP can be make or break for your business, and planning ahead is essential and often overlooked. To avoid any awkward or difficult conversations when awarding time comes and goods start moving, take ample time to prepare before going to bid. Organizing expectations for all parties and operating with total transparency throughout your bid cycle will yield the best results.
Following these key steps will ensure your business’ and bidders’ expectations are aligned on what your RFP process will look like, and what the future of your contractual relationship and service agreements are.