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Shorter RFPs gain ground as market softens

Rethinking freight procurement benefits shippers, carriers

(Photo: Jim Allen/FreightWaves)

After years of soaring rates and strained capacity, shippers have been buoyed by a softening market over the past few months. As capacity loosens up and spot rates fall, shippers and carriers alike are taking a look at their contracts. While carriers are hoping to lock in new annual rates before they dip even lower, shippers may be interested in evaluating shorter-term options that allow them to take advantage of future market shifts. 

“For the first time in more than 3 years, the market is more favorable to shippers than carriers,” Emerge COO Cameron Ramsdell said. “Supply is exceeding demand. Therefore, carriers want to lock in longer RFP cycles to hedge against potential downward rate shifts. However, shippers are replacing longer RFP cycles, opting for bid events more frequently than once a year, a previous industry standard.

Shippers are becoming more confident in the market thanks to falling spot rates and growing tender acceptance rates. These trends show no sign of stopping anytime soon, and – in an effort to capitalize on increased carrier capacity and lower rates – shippers are becoming more interested in options like mini bids.

Shorter RFP cycles allow shippers to take advantage of market shifts in the short term, enabling them to maintain rates that are as close to real-time market offerings as possible. This means shippers have the opportunity to take advantage of lower rates quickly as the market continues to loosen, something they would likely lose by agreeing to an annual contract at this point. 

Emerge’s freight procurement platform allows shippers to take advantage of different RFP types. It doesn’t stop there, though. In order to make effective choices, shippers need access to the data that allows them to determine which lanes need to be repriced and when. Success requires coupling decision-making with efficient technology, which is what makes Emerge’s cutting-edge freight procurement platform so valuable. 

“Emerge is helping customers with data-enabled solutions, like benchmarking. This tool provides real-time information showing shippers if they are at, below or above market rates in an easy-to-use platform,” Ramsdell said. “With just a few clicks, shippers can duplicate events so they can run monthly/quarterly comparisons against industry averages.”

The Emerge Dynamic RFP has reinvented freight procurement. Tedious processes like awarding lanes and negotiating rates are handled through the platform in order to reduce the use of spreadsheets or email. By streamlining this process, Emerge makes it easier for shippers to manage multiple bid events, effectively making mini bids and shorter RFPs possible and plausible for the first time. 

“Shippers and carriers should be willing to adapt to the strategic change moving from longer term awards to shorter term. Shippers should also use optimization to benefit incumbent carrier rates over new providers that may seem to offer a good deal but may not deliver,” Ramsdell said. “In short, avoid ‘paper rates.’ It is also a good time to evaluate moving more freight with asset-based providers rather than through the spot market.”

Now that these more flexible contract options are available, players across the supply chain should expect them to become more popular. Ultimately, this shift can provide a host of benefits for shippers and carriers alike, leading to more accurate rates and stronger partnerships over time.

“Today’s business environment requires speed and agility to compete. That is an advantage that Emerge brings to all customers,” Ramsdell said.

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.