The biggest constant in the freight industry is change and the freight mini-bid has become the tool of choice by logistics professionals as a way to navigate the volatility found in the dynamic freight market that thrives at the intersection of supply and demand.
The events can either constrain freight markets or produce situations of excessive freight capacity.
Whatever the situation, neither is healthy for those whose well-being depends upon a well-balanced supply and demand market, as each takes time to correct and balance themselves in the complex freight networks operating in the global economy.
Even in the best of times the freight market follows a cyclical pattern , as is illustrated through Coyote Curve pictured below.
Navigating the "normal" freight cycle that is driven by economic boom or bust is difficult enough, but in today's closely tied globalized supply chains has made managing them exponentially more difficult.
All said, in today's world a balanced freight ecosystem that is without disruptions has become more a fairy tale and a short-term unicorn event.
As a result, logistics managers are constantly navigating the peaks, valleys and disruptions to be successful for their company and in their career.
There are a number of strategies shippers can take to better position themselves for the freight capacity required for the year against the backdrop of the coming challenges. We address many of the trends and strategies each year in our annual Logistics and Supply Chain Trends and Beyond Article.
One of those strategies for shippers to help in their challenges is a freight mini-bid, or as some call it, a mini-RFP.
Mini-bids are done to address either internal or external changes that have become an issue for capacity demands or pricing challenges for a set of freight lanes that were not present at the time of the full freight RFP (request for proposal).
Conducting mini-bids is a method for shippers to best align their freight requirements, as conditions change for them in the market.
Condition changes can be either internally and / or externally driven, with a listing of examples of situations where executing a mini-bid makes the most sense:
As the above illustrate, the theme of mini-bids is to use them in opportunities that are caused by the following:
In summary, a freight mini-bid is used to address problematic lanes within a company’s freight network for service and / or pricing reasons, with the pricing goal of avoiding the highly volatile freight spot market at all costs.
And for those new to freight contracts understand the annual agreements that come out of a freight RFP are not binding documents, but instead a general agreement that shippers plan to tender a certain volume of freight that carriers will move at an agreed-upon rate when the carrier has equipment in the area.
What all the above means is carriers are not bound to pick-up and deliver your freight and the freight mini-bid solves the problem.
The last point to make is that while this article is focused on times when freight capacity is at its tightest, min-bids can also be used when there is excessive freight capacity and your company is looking for lower priced options on freight lanes your incumbents choose not to lower their pricing expectations on high cost freight lanes that have the most impact to your company's bottom line.
If you're ready to take the next step, at InTek Freight & Logistics, we can help. Just tell us what you need and we'll discuss how our expertise can help with the unique shipping challenges your business faces. Rather do a bit more research first? View our Freight Guides for comprehensive articles and eBooks on all things freight and logistics.
For more on obtaining the best freight rates we recommend the following articles from the InTek Learning Center: