The conventional request for proposal (RFP) process is notoriously tedious, expensive and antiquated. After a year characterized by strained capacity, sky-high rates and surging e-commerce sales, it is also dying.
Traditionally, RFPs are administered via email and Excel spreadsheets. The process involves a lot of manual labor and can be extremely time consuming, which makes it especially difficult to execute during extreme market conditions like those seen in 2021.
“There’s a perception of simplicity with those tools, but in reality they’re expensive. Excel is a great, ubiquitous tool, but it is being used in ways that it was never intended,” Emerge CTO John Hess said. “I think it is certainly going to take a long time, but these kinds of tools are going to go away in favor of the more sophisticated tools coming out today.”
Newer, more user-friendly RFP tools — like the Emerge Freight Procurement Platform — have started hitting the market, giving shippers the opportunity to turn their RFP process into a streamlined digital experience. These tools allow shippers to award bids faster and perform far less manual labor, bolstering their bottom lines and allowing them to repeat the RFP process more often.
“We’ve heard people talk about the economic pressures that are occurring — like supply-side complaints and other market challenges — stressing traditional RFPs,” Hess said. “Traditionally, shippers have come out with long-term RFPs. We are seeing a fundamental failure with the outcomes of those.”
Even during the calmest years, the logistics industry is known for its volatility. That often leaves RFPs more or less useless well before their expiration dates, pushing shippers into the spot market. The opportunity to administer RFPs more than once a year without adding unmanageable stress to their teams is a real win for shippers, allowing them to manage this changeability without having to endure spot market rates.
Contracts are typically thought of as long-term commitments, while the spot market is seen as a short-term solution. Hess believes this will change as digital RFP tools gain popularity, allowing contracts to become significantly shorter.
“As solutions get more sophisticated — as shippers are able to easily execute contract-like solutions — contract time frames will come in and start to push against spot time frames,” Hess said. “Over time, contract and spot will start to blend.”
The emergence of easy-to-use RFP tools will not do away with the spot market completely, but the spot market may eventually come to be seen as primarily a same-day solution, according to Hess.
Contract freight isn’t going away, the process is simply being reimagined.These new solutions provide indisputable benefits for shippers, but they come with perks for brokers and carriers as well. Digital solutions are inherently more transparent than do-it-yourself spreadsheets and opaque legacy tools. When utilizing the Emerge platform, brokers and carriers are able to communicate easily with shippers and see how they stack up against their peers, reducing the frustration associated with the mostly blind bidding that accompanies traditional RFPs.
Click here to learn more about how Emerge can help your company navigate the RFP process.