Old-school RFP processes are keeping shippers in the past

Historically, the RFP process has been laborious, expensive and exclusive. Shippers have aimed to work with as few carriers and brokers as possible while locking in rates on an annual basis. Over the past couple of years, market shifts and capacity constraints have illuminated the flaws in this unsustainable process. 

“For many years, if you talked to shippers, their whole goal was to limit the amount of carriers that had access to them. If a shipper could use one carrier for everything, they would love it. That’s just not how it works,” Emerge CEO Andrew Leto said. “Your average shipper in the U.S. has 15-20 carrier and broker relationships. There are 65,000 for-hire truckload carriers.”

Shippers may benefit from limiting the number of partners they work with in a loose market, but this exclusionary approach has become a serious — and seriously expensive — problem as capacity has tightened and rates have climbed to record highs. 

“You have to start looking at your supply chain and knowing where your gaps are,” Leto said. “One of the biggest problems in this industry is the capacity matching.”

Most shippers are still relying on spreadsheets and emails to deal with both spot and contract bids. At a time when shippers are being forced to run more spot bids than ever, this process can be a real liability, as it tends to be inefficient and opaque.

“You have to run a bid, get new carriers, manually award the bid and then manually change the route guide in TMS,” Leto said. “You can’t be agile doing that. Emerge will automatically change route guides in your TMS, making you much quicker and faster.”

In order to thrive in the current market, Leto encourages shippers to ditch their old solutions in favor of a multifaceted, tech-savvy approach. Shippers should be taking advantage of cutting-edge visibility solutions, modern benchmarking options and a good RFP platform that works with their TMS. 

The best RFP platforms, like the one offered by Emerge, not only play well with a shipper’s TMS, but also bring their freight out into the light, giving a wider network of carriers and brokers access to the shipper’s freight. This helps combat the market tightness and sky-high rates shippers have been grappling with. 

When these easy-to-use RFP platforms are coupled with benchmarking tools, like FreightWaves SONAR, shippers gain even more control over their shipments. With strong benchmarking and predictive freight rates, shippers can decide whether a shorter or longer RFP is right for them at any given moment, ensuring they do not get locked into subpar rates over the long term.

Click here to learn more about how Emerge is reinventing freight procurement.