There was a point in time when fleets and shippers would engage in a negotiation that was designed to secure capacity and rates for the coming year. “Bid season” would roll around sometime in the late summer/early fall and once the rate was agreed upon, a contract was signed, and everyone was happy.
Bid season, though, is rapidly changing. No longer is it confined to one point in time and, according to James Langley, president of the Dart Network, it is in fact an ongoing process.
“It is true that the bidding process is a never-ending process,” he tells FreightWaves. “You still have the [timeframe] where you do the big bids…but now you get ‘mini-bids’ throughout the year.”
Langley explains that opportunities crop up throughout the year and that makes the process a year-round endeavor. It’s the use of technology, though, that is not only making this possible, but also making it profitable. Two years ago, Dart was bidding on 2,500 lanes a year in its over-the-road network, but utilizing TMW System’s Engage.Bid solution has helped the company fine-tune that process by utilizing robust network design tools.
“When we did bids through the tools and the network design, we realized that about 80% of our business was in 1,000 lanes,” Langley says. That doesn’t mean Dart is turning down business, but what it means is that when Dart bids on business, it is applied to the network design plan to ensure it meets company parameters. It has also allowed Dart to bid on contracts it believes it can prosper with.
“With our team and pricing, we would not be able to keep up with all the bids coming at us,” he adds.
Tim Leonard, CTO of TMW Systems, says that as much as 85% of the $726B freight market is moved under contract, and much of that is a manual process.
“Carriers spend a lot of time and effort to get rates for these lanes,” he says, noting that a common problem is salespeople bidding on lanes where their carrier has no assets, or in lanes where the additional capacity needed may jeopardize a current contract.
“Salespeople were taking more loads and assets were not being used in the best places to take advantage of hot-spot processes,” Leonard adds. “[We also] discovered that shippers were giving loads but carriers had no assets.”
TMW is now offering users of its Engage.Bid platform the chance to put the bidding process into a blockchain, providing even further transparency into the process. The solution works without the blockchain, of course, but the end result is the same – more visibility into the bidding process and better asset utilization as a result.
For Langley, that transparency is important. “It’s hard to hold each other mutually accountable when the visibility is not there,” he explains. “What we’re trying to do now is integrate that tracking into the process. That gives you the opportunity to manage your yield business.”
One of the attractive features of the Engage.Bid platform for Dart was that a TMW TMS system is not a requirement to run it. Dart runs the solution on a custom TMS solution, and through that has been able to engage in a network design process that now allows it to see continuous profitability of each lane as well as market pricing. It’s also helped standardize contracts.
“One of the biggest challenges we have with bidding is there is no standard format,” Langley says. “We’re trying to change their language to our language.”
Engage.Bid does this through simple input mechanisms, Langley explains, which speeds up the entire process.
For Dart, the ability to leverage a technology solution, regardless of the provider, is a key contributor to maintaining profitability. Langley explains that in 2004, Dart had 381 Master Bids in its system. By 2017, that number had grown to 2,163.
“We couldn’t accomplish this without a strategic network design plan and tools to help us streamline the process to execute that design,” Langley says. “The tools we have developed here at Dart combined with those being developed by TMW are enabling more integrated data visibility. This combination of tools and network discipline have helped enable Dart to improve our loaded ratio by over 200 basis points, our utilization by over 200 miles per driver per week, and our operating ratio by more over 400 basis points in the last 2 years. Keep in mind, those improvements were made in a down market. We lost over $0.10 in linehaul rates between 2015 and 2017. As rates return, the ROI should be even greater.”
As the new world of year-round bidding has dawned upon the industry, it is technology that is helping companies like the Dart Network adjust to this paradigm, and in the process, is helping them create more profitable lanes.
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