How can you run a successful freight RFQ? In this ultimate ocean freight procurement guide, we share 3 key topics to get in order before sending your tender: good communication, solid logistics data and dedicated and modern technology (freight procurement platforms).
Ocean tenders for large and midsize shippers
Large ocean freight shippers are definitely tendering. Yet, midsize shippers are often unsure about picking the right moment to tender but do plan eventually to tender in Q1. Smaller ocean shippers are not running ocean tenders at the moment. In general, we expect a huge volume of tenders to be tendered in Q1 which will not be beneficial for anyone. Getting ahead of the pack may be better also as forwarder tender teams will be overloaded and will sort out the best deals for them at the expense of lesser ones.
What is the difference between an RFP and an RFQ?
RFPs and RFQs have a lot in common. Both of these publications are intended to assist in the alignment of price and services with shipping requirements. An RFP is a document in which a corporation requests a business proposal from those interested in their products or services in order to assist lay down formal processes. An RFQ is often utilized when a corporation has established processes but requires additional cost information.
The more detail you can supply in RFPs and RFQs, the better the answer will be.
It’s not difficult to write an RFP or RFQ if you know what you need to include in order to get the most accurate proposal or quote. Basic details like what you’re delivering and how much it weighs are vital, but digging further and being explicit about fuel surcharges you’re comfortable with or your normal lead time will have a bigger influence.
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The ultimate Ocean Freight RFQ/RFQ guide for shippers in 2022
The customary period for ocean freight negotiations appears to be disrupted by current global and economic factors. With shifting global trade policies and a healthier market for liners, it’s more crucial than ever to have solid data and information before you negotiate with suppliers. We’ve put up a little survival guide with helpful hints, questions to ask yourself, and resources to ensure you’re prepared when negotiating with your suppliers.
Requesting ocean freight rate bids can be a guessing game at times. Resulting in irritating and frustrating for some. It’s also time-consuming. And while supply chain, logistics, and/or ocean freight managers must do it every year or so, it’s ideal to be prepared with the essential data to assure a successful procedure.
Need ocean freight industry data and rates? Want to connect it with a leading procurement platform? Check-in with us for more info about our platform and partnership with leading Ocean intelligence company Drewry. Read more: Freightender and Drewry partner to bring all-in-one ocean freight procurement
Questions to ask yourself before running an ocean freight RFQ
- Do you have an OCEAN freight buying strategy?
- Do you have a platform to ensure maximum cost control?
- Do you have the right knowledge to run sea freight tenders in the current challenging logistics world?
- How do I justify an increase in the cost of ocean transportation?
- How do my pricing compare to market ocean freight rates and those of my competitors?
- Am I successfully dealing with my supplier, or do I have room for improvement?
- How can I demonstrate to my supervisors that I have done or can do a better job negotiating competitive contract rates?
- Is this the right supplier for me?
- Should I consider switching shipping providers for all or parts of my routes?
- What is the ideal contract length for specific routes?
- Based on how the market has moved and will move, where and from which provider can I acquire a competitive rate?
- How will you strengthen relationships with carriers?
- Where do you find new carriers?
- How do you make your freight flows fit carrier appetite?
- How will you better manage carrier partnerships?
3 experts tips to improve ocean freight RFQ’s in 2022
1. Good communication
Freightender tip: Some tender platforms make their tender baseline document for the carriers so complicated that carriers already get frustrated when they see the file with too many tabs to fill in. It can be done so much easier. The easier it is for carriers to fill in your tender document the better the rates and the start of the relationship with a carrier.
2. Solid logistics data
A little known secret is that a tender response to a reasonably sized ocean tender cost quite some money for forwarder organizations. Somewhere between €10,000 and €20,000 depending on the complexity, size, number of accessorials, number of rounds, data completeness and data correctness. Ensure that forwarders can quote efficiently to your tender and stand out of the crowd!
3. Modern tender technology
Many companies think that logistics procurement software is not for them and that it takes too much effort and money to implement it, run it and to get decent value out of it. That used to be so indeed when only the large blue-chip companies hired consultants or bought expensive “enterprise” software for procurement.
But that is no longer the case. Nowadays logistics e-sourcing is much more accessible in terms of technology and price and does the job much more efficient which allows you to always get good value out of it.
If you can highly automate the tender management and response process you do not only save time but you gain visibility of the process, better understand how to quote and are faster to turn tenders around. Last but not least you create a better environment for the tender management staff as this work undoubtedly leads to stress and frustration and not many people last longer than 3 years as a pricing analyst because of it.
To conclude, the tender management processes in many organizations can hugely benefit from digitization in efficiency and in cost reduction as well. Although these costs are quite hidden as they can be scattered throughout the organization and within different P&L structures, it is estimated by some forwarders that the cost of responding to an Air or Ocean bid sits between € 10,000-€ 15,000.
Reduce logistics costs and save resources
Save your resources in logistics and automate processes where you can like in logistics procurement, don’t let excel work overburden your analysts, have a system do it for you while you focus on tender results and carrier communication.
Freightender tip: Many tender managers are not aware that a large part of their work can be automated. With a specialized tender process platform, you can gain full visibility and a very efficient tender quotation process. We take out the pain of working with so many different excel, tender files and a lot of manual work and save you a lot of time.
Tips for ocean freight RFQ’s in Q1 2022
We speak to a lot of forwarders and shippers and the general picture is that a massive amount of RFQ’s will be launched in January and February 2022. This will not be your regular port congestion but big-time congestion on the desk of the people that need to quote for your tender, the pricing managers and the tender managers. So therefore some free advice!
- Start as fast and as early as possible with your tender
- Ensure your data is good and clean
- Don’t overinvite carriers
- Use a professional party, platform or provider to tender with
- Don’t overcomplicate your tender
- Give the carriers enough time to quote during the different rounds
- Avoid giving lane updates during the tender
More about ocean procurement from the Freightender blog
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- A holistic approach to logistics procurement, what is that?
- Ocean freight RFQ: 3 experts tips for professionals in 2022
- NVOCC pricing vs Freight Forwarder pricing
- Pricing management in Logistics: Lever with the highest impact on profit
At the moment for many companies the question is:
When is the right time to tender? That answer is simple: ASAP. So many companies will be flooding the tender desks of carriers and forwarders, the sooner you drop your RFQ the better while they have time.
The question that is actually more important is:
How should I tender? How you tender really makes a lot of difference. Who you are going to invite, what lanes are you going to tender, how will the data structure look like, what awarding strategies are you going to apply….
Many things to consider. Let our consultants support you so you can run a perfect freight tender.
Pieter Kinds – Founder & CEO of Freightender
Final insights from the experts of Freightender
Don’t let the market fool you! The current dynamics in logistics have caused shippers not to tender and carriers not to take part in tenders. This comes down to maintaining the status quo: keeping rates and focusing on current customers. That may turn out to be a mistake.
Lack of capacity and high prices are only temporary, however. Right now it is a very good time to see how you can digitise. Create new and better partnerships and processes to come out of the crisis swinging once it will be over. Focus on pro-active instead of reactive and you will be able to better take hold of the future.
Ocean freight rates cannot be prolonged indefinitely. Sometimes you need to run an RFQ to control the damage. Make sure you get capacity for 2022, shipping lines are not waiting around for you to make up your mind. Get the right platform in place to support you with superior logistics procurement.
Thank you for reading Ocean freight RFQ: 3 experts tips for professionals in 2022.
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