How to become a shipper of choice

During the past year, the market situation has posed significant challenges for shippers as they struggled to find available carriers, resulting in lower tender participation. This put carriers in a strong position, as they had the advantage of being able to choose their preferred shippers, leading to higher rates.  

However, we are witnessing a gradual shift in market dynamics. Many shippers are tentatively dipping their toe in RFT waters, resulting in an increased number of tenders in the market. Despite this, carriers still hold significant power in the industry. To navigate the ‘new normal’ market, shippers must adopt a strategic tendering approach.  

The goal should be to become a shipper of choice, by offering attractive terms and fostering strong relationships. To achieve this holy grail, we will help you with the following:  

• Produce effective tenders with clear documentation  

• Structure your rates effectively, with the help of some handy tools  

• Get your fuel floater right 

• Achieve good carrier communication  

As a shipper, you want to optimise your costs and save capacity throughout the year. To achieve this, you need to share all the relevant details with the carrier, such as volume forecast, peak season information, and any special services required.  

Good documentation is also crucial for carriers to accurately price their services, amidst fluctuating volumes over the year, which directly affect pricing strategies. By providing detailed and reliable records, shippers will avoid additional costs, reduce waiting hours and extra kilometres, and save capacity for more profitable shipments. 

If you provide inaccurate or incomplete data, you may face additional charges from the carrier for extra services that were not specified in the documentation, or higher prices from the start, to cover their risk. To avoid this, keep your document concise and clear, and make sure it covers all your requirements. This will help the carrier tender teams understand your proposal and evaluate your offer, and then include it in their proposal. Well-structured documentation will also showcase your expertise, professionalism and credibility. 

A final point... 

One factor that affects pricing is the rate validity. It is important to compare the rate validity and the contract duration when evaluating a tender. Long term partnerships with LSPs ensure capacity availability even in high demand or tight market situations. Updating the rates during the contract period will maintain a stable relationship between the parties despite market fluctuations.

Filling out a tender takes a lot of time and effort, so try to keep the structure as short as possible so that the carriers don’t feel overwhelmed. A simple structure also decreases effort, time and complexity in the analysis phase. Use simple sentences and avoid unnecessary details. Combine price elements, when possible, and don’t include lanes that are only for benchmarking or ghost lanes. This will make your tender more attractive and competitive.

Use an efficient rate structure and widen the bidding flexibility, where possible, in order to gain more offers. In addition, allowing alternative routing, enables carriers to offer the best price and quality options to their customers. This is possible because alternative routing follows specific established processes that optimise the network performance and reduce the costs. 

We know how tough this part of the process is. This is why we support our customers when writing tenders, according to best practices we see in the market.   

Our platform Freight Procurement provides all the functionality you need to easily create a tender and send it out to a huge carrier base, that fits your needs.  

Transporeon brings your tender efficiency to the next level.  

Fuel Floater

The fuel floater has become an increasingly important tool for shippers and carriers to cope with the volatile climate. In the past few years, we have faced significant challenges due to soaring fuel prices, particularly during the UA war, when prices reached unprecedented levels. As a consequence, many carriers faced financial difficulties and some even became insolvent.

From a shipper's standpoint, there is a substantial risk of losing reliable carriers during such volatile market conditions. It is imperative, therefore, to have a fuel floater that is well understood and widely accepted by our Main Carrier Base.

What to consider when setting up your new fuel floater model 

1. Chose the right floater model for each transport mode: 

• Road Freight 
• Air Freight 
• Sea Freight 

2. Is your fuel model accepted by every carrier?  

• Or do they have a problem understanding it? 

• Or do they see difficulties in using them in operational business? 

3. Is your fuel share aligned with the current needs and requirements of your network, considering both short and long-distance operations, as well as regional specifications? 

• Short and long distance require different fuel share 

• Regional specifications, for example Western and Eastern Europe fuel price levels are different 

4. How do you cover volatility adaption?  

• The adaptability cycle plays a critical role in establishing an effective fuel methodology. It is essential to regularly evaluate and adjust your approach to account for price fluctuations and market dynamics. 

• How frequently do you allow for price adaptations in your strategy?  

5. Is your fuel source accepted in the market?  

• Several fuel sources are in use in the market from different shippers 

• Is yours one of the common sources?  

6. How to define your fuel base line 

• Should you use a monthly average, or quarterly?  

Outcome: Risk minimisation through best practice fuel floater 

• Avoid the need for frequent price renegotiations. 

• Minimise the risk of losing contracted carriers. 

By implementing a best practice fuel floater, you can effectively manage and mitigate risks associated with fuel price fluctuations. This approach helps you avoid the inconvenience and time-consuming process of renegotiating prices with carriers whenever fuel prices change. Additionally, it reduces the likelihood of losing carriers due to unfavourable market conditions, ensuring the stability and continuity of your transportation operations.

Here’s how to create a solid communication strategy: 

Timeline

Establish a clear timeline for communication throughout the tender process.  

Pre-tender: Start by initiating contact with carriers before the tender to introduce your organisation and establish a relationship.  

During tender: Regular and timely communication should continue during the tender period to address queries, provide clarifications, and share updates. 

Post-tender: good communication is crucial for finalizing contracts, discussing terms. 

Communication Methods 

Use a combination of communication methods to effectively engage with carriers. This can include emails, phone calls, personal meetings, webinars, and question rounds. Choose the methods that best suit the nature of the communication and the preferences of both parties. 

When developing your communication strategy, always keep in mind a defined Code of Conduct, this means being respectful, friendly and fair. 

Communication matrix 

By implementing a well-designed communication matrix, you can streamline communication processes, enhance transparency, and improve collaboration across all relevant parties. 

1. Contact Information: include the names, roles, responsibilities, phone numbers, email addresses, and other relevant contact details of all individuals involved in the communication process.  
2. Responsibilities: clearly define the responsibilities of each contact person within the communication matrix. This ensures that everyone knows their role and understands who to reach out to, for specific inquiries or escalations. 
3. Escalation Information: identify the escalation process and provide details on who should be contacted in case of urgent matters or unresolved issues.  
4. Targets and objectives: specify the targets and objectives of the communication matrix. This may include involving all relevant contact persons, ensuring transparency of contact data, and simplifying data management and information flows.  
5. Data management: use a dedicated platform, such as Transporeon, to organise, update and share information regularly. 
6. Information flows: identify key communication channels and methods to be used for different types of information sharing. This can include email, phone calls, meetings, or project management tools. Again, our Transportation Mangement Platform can help. 
7. Regular Updates: schedule regular reviews and updates of the communication matrix to reflect any changes in contact information, responsibilities, or escalation processes.  

Relationship management 

• Get to know relevant contacts with your carriers  
• Set up regular (personal) meetings 
• Make sure you understand your carrier’s need: conduct a personal analysis, evaluate their potential as long-term partners and get a feeling for the people/culture/behaviour 

Outcome:  

Effective communication plays a pivotal role in becoming a shipper of choice. By ensuring clear and precise communication you can achieve a common understanding and build resilient relationships with carriers, making them feel welcome and valued.  

In addition, a well-prepared timeline and content for the tender process can lead to more qualified offers and streamline the overall communication flow. This, in turn, minimizes the occurrence of late offers and reduces the need for extensive Q&A during the tender process, resulting in a smoother and more efficient analysis phase.  

Ultimately, good communication enables smooth operations, enhances collaboration, and strengthens partnerships in the shipping industry.