Watch Now

Shorter bid cycles offer better rates in every market

MicroStar explains why the annual RFPs no longer best option for most shippers

(Photo: Jim Allen / FreightWaves)

Recent market volatility has prompted shippers to rethink the frequency of their bid cycles. Many companies have realized that the tried-and-true annual RFP may not be the way to real cost savings after all. 

MicroStar Director of Strategic Analysis Alex Barefoot understands the value of ditching the annual RFP in favor of briefer, more relevant bid cycles. 

“With volatility, we move to shorter bid cycles to not get locked out of capacity or lock in carriers to rates they cannot cover,” Barefoot said. “In every event, we are looking for win-win scenarios.”

While shorter bid cycles prove especially valuable during market shifts, it is important to remember that freight markets are characterized by their volatility. Because of this, issuing more frequent RFPs should be a matter of practice — not an exception — for most shippers. 

“Shorter contracts do allow flexibility as things change, and again, do the best to lock in win-win scenarios,” Barefoot said. “Having longer contracts in this situation can either give the false sense of accomplishment when rates decide to rebound or the fear of missing out if they go lower. The shorter time frame allows for either to be corrected within a proper planning cycle.”

In addition to embracing shorter contracts, Barefoot emphasized the importance of communicating with carriers as the market changes. This can prove extra important when the overall market is softening, as it helps shippers gauge the kinds of rates their carrier partners can realistically accept.

“Shippers should be open with their needs with their carrier partners,” he said. “There is a tendency to want to lock in short-term savings, but if this is not sustainable for your partner, they will come back for a price increase and any savings will just be on paper.”

Shippers can partner with third-party companies like Emerge in order to lock in short rates based on real-time market trends. Emerge uses cutting-edge technology and deep market expertise to make sure that shipper’s are getting both great rates and great service, not skimping on one to secure the other.

“Technology in shipping has lowered the barrier to information sharing and responsiveness to current market trends,” Barefoot said.

By employing the help of a partner, shippers can also ensure their carrier customers are on-board with rates from the very beginning, reducing the chances of extreme yo-yoing over a short period of time.

Click here to learn more about Emerge

Ashley Coker

Ashley is interested in everything that moves, especially trucks and planes. She covers air cargo, trucking and sponsored content. She studied journalism at Middle Tennessee State University and worked as an editor and reporter at two daily newspapers before joining FreightWaves. Ashley spends her free time at the dog park with her beagle, Ruth, or scouring the internet for last minute flight deals.