Financial milestones and market indicators within the labor market, domestic economy, customer trends, manufacturing, and housing markets demonstrate the slow economic recovery taking place today. Despite the upward trends seen in many markets and industries, there is still plenty that reflects the volatility of recovering from the COVID-19 pandemic and the various supply chain problems that still exist due to that upheaval.
As explained by Supply Chain Quarterly, "Disruptions have impacted capacity, which impacts fleet productivity, which in turn exacerbates overall supply chain volatility. Retail inventories are still well below normal for this time of the year, and government research indicates inventory drawdowns in the face of labor and materials shortages. As more restaurants and in-person activities open, consumer spending could shift back to services and experiences, even as the leisure and hospitality sectors struggle to fill jobs." The current levels of volatility do not mean demands aren’t growing and volumes aren’t increasing within the freight transportation market.
This growth in freight shipping continues to drive the demand for truckload request for proposals and ensures shippers and carriers alike are ready for the increase in this year’s truckload RFP season levels. With that in mind, it’s still important to know a few things about the upcoming RFP season.
What Is a Truckload RFP?
A request for proposal (RFP) refers to the process where a formal call is put out for a carrier to help address a shipper's transportation needs. When a shipper receives the proposal from the carrier offering services, it provides them with the opportunity to compare and contrast multiple proposals to find the carrier that best meets all necessary criteria for a particular load. The truckload request for proposal works as a direct line of communication that provides shippers with access to solutions for their trucking challenges with freight transportation.
When loads require specialized care and transportation options that a shipper’s normal processes cannot handle, these carrier bids help them hone in on the fastest, most affordable, and most reliable solutions. Shipping can begin once a carrier RFP is accepted, and the shipper-carrier contract or spot carrier agreement is finalized. With demands increasing and supply chains slowly getting back to normal, the need for fast and easy trucking RFP processing will be more vital than ever!
Why Truckload RFP Season 2022 Is Subject to Uncertainty
Pandemic aftermaths still impact much of the domestic and international supply chain networks today, which has led to:
- Driver shortages
- Higher than usual carrier rates
- Carriers opting for spot loads over long-term contracts
- Shippers wanting stable capacity
- Increased demands from consumers
- Greater pressure for enhanced performance and better services
This pressure has made the need for enhanced trucking RFP bidding, processing, and selection all the more vital in these uncertain times.
According to transportation analysis firm FTR, increasing demands and continued market growth are expected to remain solid well into 2022. However, transportation managers and shippers are likely to still struggle with driver shortages and capacity crunches.
According to TruckingInfo.com. "FTR forecasts truckload contract rates to be up about 13% for the year, but don’t expect it to peak until early 2022. It is projecting contract rates for 2022 as a whole to be about 4% higher than this year. For less-than-truckload rates are up about 15% this year, and [rates will] flatten or drop slightly negative for 2022."
However, any disruption could lead to a skewing of predictions and create a tighter run on capacity. This is despite the infrastructure bill’s promises on improving the state of the supply chain too. Improvements discussed through the bill will not become reality and meaningful improvements to the supply chain for many months. Therefore, it’s critical to approach the coming RFP season with the same attention to detail required in past years.
Typical Expectations for Truckload RFP Season
According to reports from several industry experts, this upcoming RFP season is shaping up to be a hectic and complex one. Several reports indicate that dry van spot rates are on track to be as much as 12% higher than they were last year. For 2021 as a whole, experts are forecasting spot rates to end up nearly 30% higher than a year ago. Looking ahead, experts expect that spot market rates will start to ease in 2022 but still be very strong. With this continued growth currently driving the market and with the forward push expected to continue well into the coming year, it is more important than ever that trucking RFP bidding be anticipated and well-prepped for by shippers across the freight shipping industry.
Preparing for the coming seasonal rush of RFP bids requires shippers to consider four crucial aspects of the process from the start:
- General terms and conditions must be clearly defined and agreed to by both parties.
- Payment and billing terms need agreements and verification for budgeting and funding.
- Standard operating procedures must go through a thorough review before beginning.
- Any awarded contract must include finalized terms regarding its duration.
The finer details included in bids received in response to truckload requests for proposal often include these key elements:
- The type of loads and cargo associated with each order
- Average weight per load/container/pallet
- Cargo’s estimated value, both at cost and resale
- Any specialized equipment or tools needed to load and unload cargo
- Clear, specific instructions regarding the lanes and methods
- All ZIP and postal code information for arrival and departure locations
- Freight volume for each lane and frequency of shipments
- Any variation to cargo or shipping terms based on seasons or other factors
- Fuel costs, docking or warehouse fees, and other accessorials
- Deadlines established for each pickup and delivery and approved points of contact
Understanding those factors is only part of the battle, and the rest lies in executing an RFP the right way to get the best deals possible.
How to Execute an RFP Throughout Disruption by Asking the Right Questions
This coming truckload RFP season holds the potential to offer excellent opportunities but also a great deal of uncertainty and adjustments as rates continue to level out and a new sense of normalcy falls over the supply chain network as a whole. Carriers and shippers must prepare for the upcoming rush of bids and contracts as a new year looms near. New bids, new carrier contracts, new transportation terms, new rates, new supply chain optimizations, new fee schedules, and new partnerships await. Shippers must be prepared to take action. Executing an RFP requires careful planning and consideration of the following key questions:
- What are the end goals for the partnership? What you hope to accomplish through a particular RFP and how you plan to reach that goal needs careful consideration.
- What costs and savings are on the line? Prepare for bids by estimating anticipated cost-savings and consider how each bid aligns with your overall goals.
- How will you measure success? Knowing what metrics to monitor and track and how to analyze real-time data reports will be critical to successful bidding.
- Do you need more carriers or fewer carriers? Sometimes trucking RFP bids allow the opportunity to expand carrier pools or remove carriers that are no longer effective.
- How many rounds do you anticipate? Do proposal requests stay open until you are satisfied or will you plan multiple rounds to reach as many carriers as possible?
- Do you have an open bid policy or will you operate invite-only? Both have pros and cons, so you must carefully consider each option against your carrier needs and deadlines.
- Are you going to package or bundle lanes? You must evaluate shipping and transportation needs to determine the best lane and mode choices for freight procurement.
- Will incumbents be given special consideration? Knowing how to handle particular situations and unique trucking RFP bids can help avoid delays and errors when these events occur.
- What are the timeline constraints involved? You must know and communicate with carriers what timelines and deadlines you face and how processing, shipment, and payment will occur.
- How will you communicate bid acceptance? You do not want any delays right from the start, so you must communicate carrier RFP acceptance and next steps.
Benefits of Working With an Expert in Logistics to Plan and Conduct RFPs
Working with a dedicated supply chain management team and freight broker can help management teams source more carrier RFPs and use real-time data and historical analytics to make informed decisions. Benefits of this collaborative partnership can include:
- Less stress for managers tasked with securing carrier capacity.
- Access to internal and external data dedicated to specific industry markets.
- Help in drafting general terms and conditions and ensuring legal compliance.
- Accounting for market fluctuations, shifting needs, and economic volatility.
- Analysis of RFP responses to hone in on the best carriers amongst all the noise.
- Assistance with carrier negotiations and contractual agreements.
- Help in planning mini-bids as a follow-up to annual RFPs or to initiate spot contracts.
- Awarding the bid by a neutral party to ensure more accessible communications and proceedings.
The benefits of working with a logistics expert when it comes to truckload requests for proposal review and acceptance is more important than ever as local and global economies begin to make a recovery. The report, highlighted by TruckingInfo.com also notes, “By the end of next year, spot rates should still be running higher than they were even at the peak of the market in 2018…the spot market is only about 30% of the freight market, while 70% is less-volatile contract rates [and] the surge in spot rates has been so huge that it’s pulling up contract rates.” Shippers with their eyes set on these trends are poised and ready to take advantage of opportunities as they arise to secure future growth and success despite freight market volatility.
Plan for Peak Season With a Wicker Park Logistics Partnership
When it comes to preparing for truckload RFP season, it's all about minding the small details and paying attention to every step of the process of securing a shipper-carrier contract. The clearer your RFP, the easier it will be for providers to understand your requirements and for carriers to meet you where you are currently. Despite ongoing instability, growth in both the gross domestic product and the transportation market remains solid. Experts predict we will be well into 2022 before markets return to something resembling pre-pandemic levels, but forward progress is in motion. Capitalizing on these trends and maximizing truckload capacity and carrier relations is critical. Contact Wicker Park Logistics today to prepare for trucking RFP season.