Requests for proposals allow you to evaluate trade-offs between price and quality of service and find the best freight forwarder for your company's needs.
When running a Request for Proposal process to find a freight forwarder, spend time evaluating your vendors as a whole to understand the potential value they can add to both your business and process.
Designing an RFP is not as easy as you might think—Request for Proposals often encourage thousands of forwarders to compete for your business by offering low rates, sometimes in exchange for poor, low-quality services. To choose a freight forwarder for your business, you need to run a value-driven Request for Proposal.
Read on to learn four ways to make the right choices for your freight forwarding needs.
1. Don’t let uncertainty derail your Request for Proposal.
>> Request for Proposal season is traditionally hectic, but especially so during times of crisis or disruption when costs associated with supply chains can be difficult to estimate. COVID-19 and the IMO 2020 regulations that have been introduced are recent examples that have disrupted supply chains and, for some, had an impact on the total cost of ownership. To minimize the impact of unforeseen events, be sure to vet potential service providers. The following are questions specific to current events, which can be easily tailored to understand how your supply chain could be affected during any time of uncertainty.
Coronavirus
• How are prices impacted by the coronavirus?
• Are my prices valid during the coronavirus disruption?
• How much capacity can I expect?
IMO 2020
• Is the change to the IMO bunker class included in the new offered rates?
• What are the BAF terms?
• What is the BAF mechanism and how does it change?
• What happens if my contract expires prior to my RFP completion date?
• Which prices and terms are expiring?
• What are the interim prices and terms?
• How can I minimize disruption?
Manage Through Times of Crisis
2. Be selective and intentional about whom you invite to the bid process.
>> Do your research ahead of time to get a sense of who you should consider, and what to seek in a freight forwarder.
Know how much volume you ship in each trade lane and how it shifts throughout the year. This information will make it easier for potential vendors to provide a more accurate answer regarding how rates will fluctuate.
Prepare for the RFP
3. Don’t be sold on price alone.
>> Quoted prices are not always as they seem. Clarify what quoted rates are actually getting you, as vendors sometimes present low prices for services that are less than reliable.
Keep in mind that if you select the cheapest option you risk being unprepared for variables like unforeseen market conditions (weather delays, trade wars), hidden fees and variable surcharges, or space protection upcharges. Space protection is not always included in the offered rates, which can be risky if providers are more focused on loading cargo with high revenue generation. As a result, your cargo may be more likely to be rolled. Make sure rates include your space needs. Also take note of whether rates include a premium for a direct service, how long transit times are, or if service involves a transshipment.
Highlight your service requirements and ask potential freight forwarders to provide rates for the services your business actually needs.
Provide a comprehensive rate template so all possible additional fees are laid out in advance and you can see the true cost of any given proposal. This helps mitigate confusion; with rate transparency, you can compare providers more directly. Read all the fine print before
you agree to any rates. You may also want to consider asking potential providers questions like:
• Under what conditions do your rates change?
• What rates and discounts do you offer for your clients?
• What do the rates depend on?
Seek Transparent Pricing
4. Consider what software capabilities each freight forwarder has.
>> Since freight forwarding is an industry that has been slow to modernize, ask the vendor what differentiates it from their competitors.
Explore what kind of visibility it provides into
tracking shipments, containers, and SKUs-in- transit. And, think about what your business will require. Have the forwarder describe its billing process, and if the platform is able to reconcile invoices against quotes and shipment activity.
Dive deeper with questions like:
• Does your platform collaborate with other companies?
• What are your reporting and analytics capabilities?
• What system do you use to manage your allocations with ocean carriers?
• What are the exceptions for your platform? How many unique users can I create and how many unique usernames can I associate with my account?
Invest in Software
You must trust your freight forwarder. Choose a credible and reliable service provider or partner.
>> During the Request for Proposal process, run scenario analyses and ask how they would react to potential market disruptions, trucking consolidations, and fuel fluctuations. Have vendors talk you through these potential market events, how they would help you, and what alternative solutions they would provide.
In addition, check whether they run a third- party-administered Net Promoter Score survey, who their provider is, and what their score is. Running Net Promoter Score surveys is a good indication that the forwarder is invested in receiving and taking action on feedback. If they do not use Net Promoter Score, ask for a list of client references so you can find out what kind of experiences other businesses have had with them.
Look for High-Quality Service
Don't just compare rates if you are looking for a freight forwarding partner for your business. Evaluate the quality of service. Remember, your partnership is an investment in your business.
