Anyone that works in logistics knows that it’s a lot easier to talk about a shipping strategy than it is to execute at an operational level. Be it for small parcel, air, ocean, rail or truck, every transportation executive knows that even the best of plans run the risk of not living up to what originally looked good on paper. Also known as Contingency Planning or Risk Mitigation, it is this possibility of failure that compels companies to always have a “Plan B” to fall back on.
In the realm of Full Truckload shipping, the Plan B mentality has been immortalized in the yearly bid process carried out by shippers. A long-standing practice, a Request for Proposal (RFP) always concludes with the selection of one or two primary carriers, a few secondary truckers that are awarded enough business to “keep them interested” and then some backups that can be called upon if things really go south.
Although the entire shipping community has always acknowledged the importance of contingency plans, it took the Pandemic to remind us just how vulnerable the U.S. transportation network is. Based on the FTL challenges that almost everyone experienced, what must be acknowledged now is that traditional Plan B tactics no longer work and that a more agile approach must be taken.
In this blog, we’ll briefly explain why contingency planning tied to a yearly RFP comes up short, and then move on to describe tactics and tools that increase the reliability of any shipper’s Plan B.
Let’s start by saying that logistics professionals will always be more invested in their Plan A and as such, might not dedicate as much time or thought to a Plan B. After all, the very existence of a Plan B is a recognition of possible failure, so folks understandably go all-in on their original FTL strategy. The irony of contingency planning that’s tied to a once-per-year bid event is that it actually encourages shippers to“ take the next carrier up” approach that in many instances doesn’t work out.
Noted above, once-a-year Full Truckload RFPs result in the selection of primary, secondary, and backup carriers. Because market conditions change during the course of a year, if shippers find themselves having to resort to Plan B, those secondary and backup carriers might not be there when the call comes in. While there are lots of reasons why a Plan B carrier can’t (or won’t) perform, more common examples are a lack of capacity or the simple unwillingness to move loads at the price originally quoted.
Given the above reality and depending on the reasons why a shipper had to move from Plan A to Plan B, said shippers may find themselves going from the frying pan to the fire. Basically, if secondary and/or backup truckers don’t meet capacity, service and/or rate expectations, the shipper will quickly realize that they have no viable carriers to turn to. The trick to avoiding this dire scenario is to create a contingency plan based on shorter bid periods, that are in turn empowered by in-the-moment tools that assure the seamless execution of a Plan B.
Whereas the Emerge Freight Procurement Platform is purpose-built for Plan A execution, its portfolio of tools is equally powerful when applied to contingency planning. Based on the maxim that shorter FTL contract periods can be more accurately planned for than longer ones, the Emerge value proposition starts with multiple mini-bids per year, that are then supported by features such as unlimited access to pre-vetted carriers, spot quoting and scenario modeling.
The essence of the Emerge Freight Procurement Platform is that it allows shippers to quickly execute multiple bids per year, as opposed to a single bid that covers a twelve-month period. In turn, shorter bid periods translate to enhanced accuracy and market sensitivity for both shipper and carrier, thus making the need to go to Plan B less likely.
In this sense, Emerge has a dual impact on FTL risk mitigation because it first reduces the probability of having to execute a Plan B. Second, should circumstances call for the rapid deployment of a contingency plan, Emerge is there to quickly enable the entire exercise. Here are a few ways in which the platform enables quick execution of a Plan B that will have a high probability of success.
Perhaps the biggest issue associated with Plan Bs that are born of once-per-year bids is the limited number of carriers that a shipper can turn to. When it comes down to it, a yearly RFP restricts access to carriers, so if a shipper needs to move away from tier-one truckers, there’s a chance that the scant number of secondary or backup providers might not perform.
By using the Emerge Freight Procurement Platform for Plan B mini-bids, shippers have the benefit of inviting their own partners to an event, while also enjoying direct contact with more than 45,000 marketplace carriers. With that level of capacity, it is very unlikely that a shipper will find themselves in a situation where they run out of viable options.
Sometimes, logistics people equate a Plan B with having to replace an entire FTL program. While that might be true in extreme cases, it’s more likely that a shipper will have to implement a contingency plan for a specific lane, region or project. Whether it’s due to force majeure, or because a carrier withdrew capacity, rates fluctuations or poor service, companies need to be able to focus on Plan A, while implementing a Plan B in isolated cases.
In recognition of these situations, yet another feature of the Emerge platform is the ability to conduct mini-bids for specific parts of an FTL program. If, for example, the primary carrier that’s supporting a four-month project must be replaced, a shipper can conduct a mini-bid in a matter of hours. As mentioned above, the shipper can decide to bring in carriers of their choice, as well as choose to invite truckers from Emerge’s list of 45,000 marketplace carriers.
When shippers find themselves in need of an immediate solution, they can turn to the Emerge Marketplace for spot quotes. The ultimate tool for responding to a “right now” Plan B scenario, the Marketplace offers on-the-spot quoting and end-to-end execution of loads. Not unlike mini-bids, shippers can invite their own carriers to quote, as well as have unfettered access to Emerge’s pool of carriers.
Should a shipper need to take dramatic steps and consider shifting modes from Full Truckload to Intermodal (truck-rail-truck), the Emerge Platform enables this process with its scenario building capability. Through the comparison of metrics like capacity, lead time and total cost, shippers can quickly make decisions on whether to stick with an FTL-based Plan B or move certain loads to intermodal.
Out in the real world, shippers tend to dedicate more time to their Plan A preparation than they do to Plan B. Due to a combination of human nature, time/resource constraints and a lack of access to enough carriers, shippers are just more invested in their original transportation strategy than they are committed to a fallback plan.
The other reality-based reason why shippers have an aversion to contingency planning is that it’s hard enough to design a solid Plan A without having to worry about a Plan B that will actually work. To make matters worse, this “cover your bases and hope for the best” approach to risk mitigation is institutionalized in the year-long RFP process that requires shippers to assign secondary and backup carriers that, if called upon six months down the road, may not deliver (literally).
The Emerge Freight Procurement Platform recognizes the Plan B constraints that are inherent to year-long RFPs and offers a Plan A mini-bid alternative that decreases the probability of ever having to implement a contingency plan. If a Plan B becomes necessary, the platform has the built-in flexibility to execute mini-bids on a nationwide, regional, lane or project level. Reinforced by its unlimited access to carriers, spot quoting and scenario building features, shippers have the peace of mind of knowing that when it comes time to hit the road, they’ll be able to move a load!