Major manufacturers and shippers are constantly looking for ways to improve their transportation service to help improve customer satisfaction and ensure on-time delivery of their orders. Simultaneously, most logistics managers are actively looking for measures to secure reliable truck capacity with more competitive rate costs. That is a common goal among all supply chain leaders affected by significant challenges throughout the year—such as truck and equipment shortages, rising fuel costs, seasonality, weather conditions, economic inflation, and other externalities. The weight of these factors often creates additional pressures on carriers, shippers, and brokers alike; when transportation providers no longer can longer meet their contractual obligations, shippers often turn to freight mini-bids as a solution to overcome logistical problems.
This article offers a more comprehensive look at the purpose of freight mini-bids, what this strategy offers logistics professionals, and why they should consider using transportation technologies to overcome some of the challenges they experience within their supply chains.
What is a Freight Mini-Bid?
A mini-bid is a logistics industry term that refers to a special request for pricing (RFP) on a set of specific lanes. Unlike annual or quarterly RFPs usually scheduled by a company around a particular time each year, mini-bids are often the result of supply chain challenges that occur on the set of lanes found on the bid. Perhaps their current logistics providers need help finding capacity, or, as is often the case, the provider can no longer run the lane profitably or fulfill the volume requirements they had previously agreed to. These issues usually arise long after the initial RFP is scheduled. Shippers are no strangers to disappointments in this industry. Most have probably worked with freight brokers and 3PLs in the past, who have promised the moon on service guarantees before the operations actually commence. Hence the need for mini-bids to find new carrier partners who can actually provide quality trucks and cost-effective truckload freight services.
What are some of the Challenges of Freight Mini-Bids?
Shippers can service the regular volume of loads on a given lane if the right capacity is available. Unfortunately, market forces that work against the interests of shippers and freight brokers often exacerbate supply chain challenges that arise during the year. These market forces are also some of the reasons why freight mini-bids happen in the first place, as it becomes difficult to find transportation providers to offer steady capacity year-round. For example, the seasonality of produce often leads carriers to take advantage of the freight spot market, which typically pays better for carriers and owner-operators alike. This sometimes creates capacity issues where the market might get tight in certain areas as carriers flock to different regions of the United States that will pay the highest available rate. The peak shipping season from mid-August to late December, which includes the holiday shopping season, is another seasonality that creates capacity issues for shippers. Combined with economic inflation, high fuel prices, and port congestion, this can create problems for shippers that a contracted freight rate might not truly solve. Freight mini-bids are designed to find solutions to these chronic problems, specifically to partner with a logistics provider who can help optimize supply chains and provide cost-effective solutions to their customers.
What are the Benefits of Freight Mini-Bids?
One of the advantages of freight mini-bids is that it allows shippers to expand beyond their current network of carriers and potentially partner with a new provider who can offer more consistent service. Mini-bids can also provide temporary relief to fix internal or external problems causing service issues by finding a sole provider or a group of providers who can help take some of the freight volumes. Freight mini-bids provide opportunities for brokers and 3PLs to tap into their existing carrier relationships and to be able to ensure reliable capacity when other providers fail to do so. In the freight world, this is known as “getting your foot in the door,” an opportunity to maybe win a particular lane, demonstrate your company’s ability to ensure capacity, and potentially expand that business relationship beyond that into a larger and more lucrative contract found within an annual RFP.
When to use Mini-Bids vs. Using the Spot Market?
Due to capacity issues, contract freight rates may not always be an option for shippers or brokers. When capacity is tight on specific lanes, it’s important to partner with providers who can offer practical solutions to support your supply chain by using technology solutions such as freight data analytics to help match carrier partners with your loads. Digital platforms allow shippers to get instant rate quotes, and capacity matching can provide coverage when your company needs it most — even if it costs more than your desired target rate, you can get the capacity you need. With market forecasts often tricky to predict, having access to data can be the difference between whether your product stays on the dock or gets received on time and in full.
The Role of Data and Technology in Truckload RFPs and Mini-Bids
Access to real-time freight data like SONAR, a technology that can help shippers calculate rates and find capacity, can help shippers overcome supply chain management challenges through mini-bids and annual RFPs. Technological solutions help shippers shore up capacity, find historical information on specific lanes to predict seasonality, and plan for long-term and short-term goals. Shippers can connect their supply chain directly to a forecasting model that can help determine shipping rates on any given lane. This approach can help shippers save on their transportation costs. These programs can connect directly to your existing TMS via API, allowing you to integrate the software seamlessly into your company.
Wicker Park Logistics Takes a Consultative Approach to Support Customers
Thousands of shippers depend on Wicker Park Logistics for its ability to overcome some of the nagging challenges shippers face when hauling commodities nationally or cross-border into Canada. Whether you are looking for contracted rate pricing, dedicated solutions, or supply chain management, Wicker Park Logistics combines data analytic tools and a dedicated team of experts to support the unique needs of its customers. Wicker Park Logistics takes a consultative approach to help shippers on their most challenging lanes. This is one of the major reasons why the company loves participating in freight mini-bids. It allows them to learn about your company’s major pain points, build a carrier network that supports your lanes, and handle your time-sensitive commodities to ensure each load delivers on time. Reach out to Wicker Park Logistics today!
