RFPs can be a carrier’s best friend or a big waste of time and money. On the one hand, RFPs are a fast way to get your foot in the door with a shipper and earn consistent new business. A well-run RFP will tell you a lot about the company and its needs. And you’ll have a fair chance to earn that business. The problem is that not all RFPs are well-run and come with risks and costs for the carriers who participate.
In other words, chasing every RFP can be a mistake because they are not all the same. A bid is only as good as the shipper issuing it. The challenge, of course, is knowing which RFPs are worth responding to and which are not.
When you know the shipper and are confident the opportunity is good for your business — go all in. At the same time, you need to know the red flags that signal that an RFP is best avoided. Here are a few:
An RFP that has little more to it than a place for you to enter rates should make every carrier pause for two reasons. First, in most circumstances, a carrier doesn’t want to be evaluated based on its rates alone. Competing only on rates is usually a race to the bottom that you do not want to win. In addition, for you to accurately quote rates, there are going to be details about the shipper’s business you need to know. Lanes, volumes, delivery, and handling requirements are just a few of the details that have the potential to impact your costs and, therefore, your rates to handle the business.
If a shipper is unable to offer enough information for participating carriers to provide an accurate quote, it hurts them because carriers need to price higher to account for the unknowns. It’s also a red flag for the carrier because vagueness on the part of the shipper with this type of information is indicative of how a shipper operates. So, tread lightly when this is the case.
Just like the shipper not sharing information, it’s a warning sign when the RFP and issuing shipper do not not want to learn more about your business. This is because shippers that are interested in a meaningful business relationship will want to know about your company, such as its strengths and how it feels you will be to work with.
And if the RFP feels too cookie-cutter, then you have to wonder how seriously the shipper is taking the RFP. Could the shipper be running the bid out of obligation or to check a box? Or, is it possible the company will not do an in-depth review of responses? Any carrier taking the time to reply to a bid deserves the chance to get full consideration and be provided the opportunity to share information that the carrier feels will help with the shipper’s decision.
Although it’s not always necessary, it is a good sign if a shipper leverages technology to execute their bids. With the right platform, you can be sure the company is really vested in getting the most from their RFP and is taking the process seriously. If nothing else, you’ll know your rates and proposal are getting a fair and thoughtful review.
In the end, if you are going to participate in a bid, you want to know you are getting fair consideration and that the shipper is giving serious consideration to its RFP process, response, and execution.
Does this sound familiar? A shipper wants a fast reply on rates but is slow (if ever) to respond. This could be a sign of a few things, none of them positive. One hard truth about RFPs is that some shippers issue bids primarily to get better rates from incumbent carriers or just to benchmark rates with no intention of adding new carriers.
It’s completely reasonable for carriers to have questions about an RFP, and shippers should appreciate questions because it shows the bid is thoughtfully being considered. But, if the shippers can’t take the time or are unwilling to reply, it is probably a bad sign for how the company will be to work with in the future.
Positive shipper/ carrier relationships are a two-way street. If you’re investing your time to respond to a bid you need to make sure it is with a company that will be respectful and sees you as a long-term partner—not as anything less.
The shipping industry is a small community in some respects, and there are not a lot of big RFP opportunities with companies that you and your competitors don’t already know about. So, you may already have a good idea of which bids are worthy of consideration.
Here is one final warning. There is a good chance that any red flags and problems that show up during an RFP will be magnified many times over when you’re moving freight—it’s almost guaranteed. What we mean by that is if a company is disorganized or unprofessional during the bidding process, there is a good chance the same types of problems will happen during the day-to-day process of moving freight. Poor communication in a bid probably means there will be poor communication moving their freight.
RFPs can be a valuable business development opportunity with huge upsides for carriers, but they must be approached with careful consideration. The time it takes to participate comes with a cost, and the goal should never be to participate in as many bids as possible; it should be to participate in only the right bids that will lead to the type of business and freight that is good for you.