• ITVI.USA
    14,959.950
    116.940
    0.8%
  • OTLT.USA
    2.933
    0.012
    0.4%
  • OTRI.USA
    19.350
    0.220
    1.2%
  • OTVI.USA
    14,926.910
    120.050
    0.8%
  • TSTOPVRPM.ATLPHL
    2.910
    -0.050
    -1.7%
  • TSTOPVRPM.CHIATL
    3.790
    0.080
    2.2%
  • TSTOPVRPM.DALLAX
    1.460
    0.170
    13.2%
  • TSTOPVRPM.LAXDAL
    3.740
    0.020
    0.5%
  • TSTOPVRPM.PHLCHI
    2.270
    0.030
    1.3%
  • TSTOPVRPM.LAXSEA
    4.150
    -0.010
    -0.2%
  • WAIT.USA
    131.000
    -2.000
    -1.5%
  • ITVI.USA
    14,959.950
    116.940
    0.8%
  • OTLT.USA
    2.933
    0.012
    0.4%
  • OTRI.USA
    19.350
    0.220
    1.2%
  • OTVI.USA
    14,926.910
    120.050
    0.8%
  • TSTOPVRPM.ATLPHL
    2.910
    -0.050
    -1.7%
  • TSTOPVRPM.CHIATL
    3.790
    0.080
    2.2%
  • TSTOPVRPM.DALLAX
    1.460
    0.170
    13.2%
  • TSTOPVRPM.LAXDAL
    3.740
    0.020
    0.5%
  • TSTOPVRPM.PHLCHI
    2.270
    0.030
    1.3%
  • TSTOPVRPM.LAXSEA
    4.150
    -0.010
    -0.2%
  • WAIT.USA
    131.000
    -2.000
    -1.5%
Logistics/Supply ChainsNewsSponsored InsightsTechnology

What are RFP expectations for 2022?

Survey finds only 32.1% of shippers plan to issue requests for proposals

2021, like the year before, has been marked by great uncertainty and has disrupted logistics networks. This has made planning and budgeting especially difficult for shippers affected by supply chain shortages and port congestion, but the show must go on.

What’s in store for 2022? If only we knew — but we can get an idea of what the industry expects.

In speaking with many of its shipping partners, Echo Global Logistics found market expectations to be mixed. That, in turn, has shippers implementing various RFP strategies. Echo developed a survey to gain further insight as to how shippers plan to respond to market uncertainties.

Echo’s survey received 1,787 responses from its shippers, providing feedback on expectations for 2022.

According to the survey, only 32.1% of respondents said they plan to administer an RFP for 2022. This doesn’t surprise Sean Burke, chief commercial officer at Echo Global Logistics, who said that shippers might feel uncomfortable doing a traditional RFP next year because of insufficient volumes in particular lanes or because they’ve decided to rely on the success of incumbent carriers to avoid further disrupting their routing guides. 

Regardless, Burke said many of his clients are having a hard time figuring out their annual budgets. He attributes most of the hesitation to rate increases, and 52.3% of those surveyed expect rates to increase next year as well.

“I think we all know this is a cyclical industry, but it does feel at this point in time, from a budget perspective, that most people do anticipate these heightened rates to remain in place through most or all of 2022,” Burke said, adding that the length of RFPs is dependent on how they interpret market conditions.

Of the shippers that are planning to administer an RFP, the combination of heightened rates and market tightness has them staying put or shifting to shorter terms. Echo’s survey revealed that 40% of shippers plan to contract their rates annually while 36.7% are going quarterly and 9.8% semiannually. Only 13.5% plan on doing multiyear RFPs.

Burke reasoned that the desire for better cost-per-unit forecasting may explain why shippers have shifted to shorter terms, so long as their routing guides remain intact. 

Some clients are telling Burke that they hope their primary and backup carriers will be able to cover the majority of their freight, avoiding the spot market as much as possible. But he’s also heard many shippers say they want their routing guides to have more depth. How deep remains the question. Tight markets usually welcome larger carrier bases, but Burke said each shipper goes about it with a different approach.

Asked if shippers were going to add, reduce or maintain the same number of providers, 66.5% of respondents said it would depend on market supply, demand and rates, while 29.6% said they felt comfortable adding to their current network of providers.

“On the lanes where we have an incumbent and the service has been good, we may not want to take that to bid this year, because replacing a carrier can be really disruptive; whether it’s asset or non-asset, it can cause even more disruption for an already disrupted supply chain,” Burke said. “But on those lanes where we’re always going to spot [market] and no one’s honoring those rates, maybe we go ahead and invite more providers to it.”

Burke advises shippers to provide as much detail as possible with each forecast and to clearly state their operational expectations for each lane. At the same time though, he said it’s best to set realistic goals and understand that tender acceptance rates can be affected by many factors, such as nuances in pickup and delivery schedules. 

“Make sure to really value and reward the incumbents on lanes that are performing well. It’s great to invite new providers into an RFP for those lanes that you want to expand, but make sure that you’re setting proper expectations with the new bidders to understand your process,” Burke said. 

He continued, “If you’re going to award a new provider, make the time for a conference call to rereview all those operational requirements and do a proper onboarding so everybody is set up for success, because the more information sharing we have, especially during these times, the better off the partnership will be as a result.”

Click for more FreightWaves content by Jack Glenn.

More from Echo:

Technology combined with relationships form ultimate transportation solution

Managed transportation takes complexity out of logistics

Jack Glenn

Jack Glenn is a sponsored content writer for FreightWaves and lives in Chattanooga, TN with his golden retriever, Beau. He is a graduate of the University of Georgia's Terry College of Business.

We are glad you’re enjoying the content

To continue reading, please log into your FreightWaves account below

By signing in for the first time, I give consent for FreightWaves to send me event updates and news. I can unsubscribe from these emails at any time. For more information please see our Privacy Policy.