logistics tips

Love me tender? Successful transport tender management.

Today, outsourcing transport management is the rule not the exception. But how to find the best partner? Key success factors for transport tenders.

Outsourcing transports? Of course. But to whom?

Maintaining an own fleet of vehicles is no longer efficient for shippers and this job is left to the professionals these days: transport service providers. But the process of outsourcing goods distribution, negotiating complex service contracts, and establishing successful transport partnerships can be a daunting task.

The goal nowadays has moved far beyond just driving down costs. The quality and scope of the transport service itself, efficient internal processes, and smooth partner collaboration are of increasing importance. The path to successful outsourcing has many twists and turns.

Potential pitfalls include sourcing the right partners, comparability challenges, and requirements in the area of compliance and auditing. How many carriers should you partner with? How do you pick the best service for each different region and transport mode? To answer these questions, most companies opt to call for a tender.

Generally, businesses can put anything out for bidding – and they increasingly do so. For transport management, experts recommend to tender basic contract logistics transports at least once a year, air freight transports possibly twice a year, and ocean transports once a quarter due to the decline in container rates.

This provides for utmost flexibility to respond to market situations. But of course, “why fix it if it ain’t broke” still applies, too: careful consideration should always be taken before successful partnerships are terminated. After all, it’s about more than just the price tag, but bear in mind that a tender might also serve well to renegotiate existing contracts to align with latest market levels.

Call for tenders, ok. How? Three options.

The process of calling for tenders and ultimately awarding transport contracts is often a lengthy one that requires much preparation. Today, nearly everyone relies on IT support for tender management, but the degree of automation still varies greatly. Generally, there are three options:

Simple tools for basic needs

Most shippers use simple tools such as e-mail and file attachments to call for a tender and transport service providers typically submit quotations by using spreadsheet templates. Collection and comparison of different providers’ tariffs then usually takes place in Excel as well. This process makes perfect sense for smaller businesses with fairly basic transport needs. But the complexity of tender management can quickly escalate, making this method difficult to manage.

Automation for more complexity

Once a company begins calling for tenders several times a year, the use of specialized IT solutions makes sense. They focus on absolute transparency, tamperproof archiving, and automation of cumbersome processes. Users can define standardized texts using their existing documentation such as shipment data, general terms and conditions, and international commercial terms. The ease with which documents are duplicated enables shippers to reach out to new service providers without extra efforts, offering a more comprehensive picture of their market.

Online platforms as an additional option

Specialized online bidding platforms and portals offer another alternative for managing transport tenders. Here you have different options for awarding contracts, depending on the platform provider: from requesting ad-hoc shipments through online auctions to awarding comprehensive, long-term contracts through e-sourcing platforms. Required data must be prepared to fit the providers’ available formats and can usually be fed into different templates and by various automation degrees.

This actually reminds me of a recent warning by TAPA (Transported Asset Protection Association) that I should share in this context, regarding cargo theft and online freight exchange fraud.

Practical advice: six steps to successful transport tenders

Whichever way you choose, the process of calling for tenders and ultimately awarding transport contracts is generally a lengthy one that requires much preparation. One of the first steps is for shippers to analyze what they need to ship to which regions and under which terms and tariff structures. The data needed to call for tenders – volumes, routes, transport modes, service levels, etc. – provides the basis for soliciting quotes.

In other words, you first need to consolidate your data and assess the status quo before you can generate the bidding documents and specifications. Take a look at the following six steps to help guide through the process:

Six steps for transport tenders at a glance
Six steps for transport tenders at a glance

Practical advice: things to keep in mind for success

Freight and transport contracts can get complicated – different providers use different tariff formats, zoning logics, graduation of prices, and additional services and fees. It’s not quite as straightforward as a mere comparison of numbers. So here are also some pointers on what to keep in mind when preparing a transport tender:

Success factors for transport tenders
Success factors for transport tenders

I hope this is useful to you. Do you proceed differently in your organization? What’s the process on your side, and how happy are you with it? I’m interested in your feedback and look forward to your comments on LinkedIn.