Rethinking shipper-carrier relationships as freight tender rejections rise

27.04.2021

 

Freight tender rejections are pushing 30%  

According to the Outbound Tender Rejection Index (OTRI) for the end of Q1, road freight carriers are rejecting electronic tender request at a rate of almost 30%. Continued truck capacity shortages paired with high freight demand are the main causes of this effect, while seasonal market fluctuations, such as grocery spending, contribute.

The situation has put pressure on shippers. Prolonged capacity and demand shifts may require shippers to rethink how best to build successful relationships with carriers. This blog post proposes some strategies for how to build these relationships with the goal of long-term partnership and resilience against market fluctuations.

Going beyond “Shipper of Choice”

Being a “Shipper of Choice” used to be enough to ensure competitive advantage. Not anymore.

Traditional routes to becoming a “Shipper of Choice,” such as long-term contracts and appealing payment terms, should still be in practice. But even if you’re a shipper employing these best practices, it’s still worth considering the untapped opportunities of shipper-carrier relationships.

Many shippers still operate in reactive mode, treating shipper-carrier relationships as transactional. This approach has a significant disadvantage, as it is anchored firmly to market volatility. Furthermore, in a purely transactional relationship, limited communication keeps both shippers and carriers out of touch with how they could best suit each other’s needs.  

But there’s a better way. 

“It’s time to start treating carriers as business partners,” says Johan Vagerstam, TenderEasy CEO. “With open communication, clear objectives and collaboration, shippers can build carrier relationships that help them remain competitive no matter the fluctuations of the freight market.”

Prioritizing shipper-carrier collaboration

Instead of continuing in the old model (transactional) shippers must think in terms of collaboration and business partnership. Here are some strategies to make carrier-shipper collaboration stronger:

  • Use digital systems for greater visibility in freight spend, rate compliance and shipment tracking. This approach empowers more open communication between shippers and carriers, where proactive processes define each party’s requirements.  

  • Make carriers propose their best solution. Be open to listen to the carriers suggestions and use their strengths to benefit both parties. Let systems do the comparison to compare the different scenarios with each other.

  • Establish a reliable feedback loop. Carriers can give shippers valuable feedback regarding how they stack up against market competitors, leading to process improvement. Establishing regular and reliable feedback protocols, such as scorecard systems, is also a great way to signal to carriers that you’re listening to their needs. On the other side, shippers should continue to employ protocols and systems that enable them to provide useful feedback to carriers, such as “you’re within 5% of the lowest rate”.

  • Work together to agree on clear objectives. This often involves shippers and carriers coming together to create detailed service-level agreements.   

Empowering collaboration through digital systems

If there’s one thing all of the above strategies have in common, it’s that they enable proactive collaboration processes. A digital system, such as TenderEasy’s freight procurement tool, can allow you to manage these processes in a single, easy-to-use platform. For more information on how TenderEasy can empower collaborative shipper-carrier relationships, please get in touch.