Raging market instability over the past couple of years has put pressure on shippers like never before. Companies have been faced with severely strained capacity, record high rates and perpetual port backups. These headwinds have made it difficult for shippers to navigate relationships with their carrier partners while weighing the importance of their own bottom lines against ultimate end consumer satisfaction ratings.
As shippers have worked to navigate this difficult landscape, many are zooming in on their often antiquated RFP processes. Historically, RFPs have been conducted annually via an expensive and laborious spreadsheet-heavy process. Now, shippers are hesitant to both lock themselves into a yearlong contract rate in the current market and too drained to engage in the process itself, making modern, user-friendly RFP solutions – like those offered by Emerge – a welcome relief.
“With all signs pointing to continued market uncertainty throughout 2022, a shipper’s ability to maintain an agile stable of contracted carriers is imperative,” Brad Wheeler, Emerge’s senior director of customer strategy, said. “By leveraging technology to efficiently put deteriorating contracted rates out to bid more frequently, shippers have more flexibility to find the right carrier at the right time.”
Shorter RFP cycles allow shippers to take advantage of market shifts in the short term. This is especially important in today’s market. While contract rates remain inflated, most experts believe the slow but steady downward movement will continue throughout much of 2022. With shorter RFPs, shippers will be able to capitalize on the changes as they occur instead of locking in an unsustainable rate now.
It isn’t just about having the ability to run shorter RFPs, though. In order to take advantage of different RFP options, shippers must have access to the data they need 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.
“Though there is not a one-size-fits-all strategy, the traditional annual RFP is losing its true effectiveness. In theory, an annual RFP should provide shippers with consistency and stability. In practice, however, route guides typically begin to deteriorate long before the year’s end,” Wheeler said. “With that being said, you can’t simply throw away the annual RFP practice. What you can do, however, is take a more iterative approach.”
As more and more shippers embrace technology to efficiently run strategic RFPs on more regular intervals, shippers will be more apt to swiftly address the “problem lanes” by running supplemental RFPs throughout the year when necessary.
This multilayered approach allows shippers to have the consistency of an annual RFP without giving up the flexibility inherent to shorter cycles. In an industry characterized by volatility, this best-of-both-worlds approach offers shippers the greatest protection against unexpected challenges throughout the year.
“With thousands of variables having an effect on the market, it is nearly impossible to make any predictions with absolute certainty,” Wheeler said. “What we have learned in the past several years, however, is that regardless of market conditions, the shippers that have the ability to adjust quickly have afforded themselves the opportunity to get a step up on their competitors.”