How often do you compare your freight rates against the market? Every year? Every two years? Less? If it’s the latter, it’s all but guaranteed you’re missing out on opportunities to optimize your freight costs. These days the trend is for freight buyers to sign shorter contracts and to go to tender more often than they used to.
There are many reasons why frequent tenders are a great way to optimize your freight costs and service levels. Rapidly shifting markets, long term insecurities and price optimization, for example, are all good reasons to go to market more often. Let’s take a look at how it works in practice.
The current state of affairs in the global economy can be described as less than stable. International squabbles and import/ export tariffs being imposed left and right, during a boom economy, are all indicators of uncertain times and potentially major changes on the horizon.
These circumstances have contributed to the volatile shipping market we see now. The well-known Hanjin bankruptcy is the most prominent example of a trend of shipping lines being forced over the edge by powerful and increasingly monopolistic conglomerates.
To avoid being chained to expensive agreements when the unexpected (or the expected) happens, it is a good idea to favor short term contracts for your freight. Or, in other terms, to launch a transport procurement processes.
As with any major market, the freight and shipping business goes through cyclical ups and downs. If freight tendering is something you look at every couple of years, your prices will no longer reflect market value, shortly after signature and implementation.
Obviously, knowing whether or not your rates are competitive is the Alfa and the Omega of any freight manager’s job description. If you go to tender, it may turn out that your current rates are well below market value – if so: congratulations! But conversely, if your last agreement was signed during a highpoint in the market, you’ll be happy that you started that extra freight tender. In short – knowledge is power!
The transport and logistics sector is often accused of being conservative and less than innovative. This is a misconception. There are plenty of new services and opportunities entering the market. This is especially true with regard to technological advancements that allow for better control and overall service throughout the supply chain.
This is particularly relevant in terms of e-trade, where services and quality are advancing rapidly. For example, new ways of delivering products (city bikes, green options, drop-off lockers, etc.), better tracking capabilities and return shipment optimizations. This is an area that constantly pushes the envelope when it comes to customer satisfaction.
If you want to make sure you’re able to cater to what might be the pickiest crowd in retail, you better be ready to update you transport offering frequently and rapidly.
So quite clearly, there are some compelling reasons for frequently going to market. But what if it isn’t possible? The most common reason for sitting on old and outdated agreements is that transport RFQs are often found towards the bottom of many organizations’ list of priorities. Quite often a transport tender is pretty time consuming, with RFIs, communications, analysis and negotiations to get through. Well, that’s if it’s done the old way…
One of the major benefits of using a tool such as TenderEasy is the ability to save large amounts of time on bid validations, analysis and more. But that’s not all – after a first tender has been concluded, that same tender can easily be copied and launched at a moment’s notice. This enables you as buyer to keep up-to-date agreements without having to go through the hassle of creating an entire tender from scratch. That’s just one argument for taking a step into the 21st century and handling your freight procurement like a pro.