Time for a mini bid already?
It’s more than fair to say that we are officially in the thick of another busy freight season! RFP roll-outs are now being implemented and/or executed, and carriers and brokerages alike are navigating through their resources to ensure coverage of their commitments. It’s as simple as that…right?
Not necessarily! Eerily similar to the same period in 2017- though perhaps less a shock to the system- the disparity in the supply of drivers and trucks relative to demand for those resources continues to create hardship for shippers. While individual shipper experiences will always vary, even the most meticulously drawn-up plans may already be showing some cracks, as evidenced by poor Acceptance and Service rates.
How can this be happening so soon? Why can’t assets and brokerages simply uphold agreements they created only one to two months ago? AFN does not aim to explain today why assets and brokerages become active contributors to these shortcomings. However, we have noticed a number of shippers have implemented an interesting solution to their procurement woes.
In recent weeks, AFN has seen any number of shippers put out “Flex,” “Mini,” or “Gap” bids/RFPs. We don’t typically see this kind of activity this early in the year. Various reasons have been presented for these procurement events, but ultimately what has happened is that these shippers have recognized gaps early on in the life of their carrier agreements. Our team sees a number of potential benefits to shippers of conducting these off-cycle procurement exercises:
- Rather than waiting for the absolute height of the freight market, shippers are taking advantage of a remaining- yet shrinking- window to fill gaps with somewhat normalized rate agreements.
- Shippers who traditionally resort to daily “Portal” or “Freight Auction” options that can be a nightmare to transportation budgets, are bolstering their networks with stronger agreements – although perhaps more expensive than expected in the original bid – to limit “spot” activity.
- Shippers are recognizing carrier and brokerage partners who have done a nice job early on, and deserve the opportunity to drive further partnership.
The idea of implementing yet another RFP can be an unpleasant thought. But many shippers have decided that the payoff is there, especially if you keep the scope small and focused, include only a few key providers, and move quickly!
AFN would be more than happy to discuss potential solutions to the current challenges in the market at your convenience. Please contact our team of supply chain professionals at firstname.lastname@example.org.