The freight cycle is incredibly unpredictable and volatile these days, especially with the fluctuating demand and supply for certain products. To navigate these peaks and valleys in the freight ecosystem, freight managers are always looking for new methods and tactics. One of these is mini freight bids. You may have wondered what these are, their advantages, and how they affect the market.
In this article, Jansson dives deeper into mini freight bids to inform logistics personnel about the practice.
Mini freight bids are scaled-down request for proposal (RFP) contracts. These are meant to address challenges that weren’t present during the initial RFP, such as a major influx of orders or a shift in the market. Mini bids are focused on a very particular set of freight challenges, helping shippers align their freight requirements with the new conditions.
Aside from addressing short-term projects or fulfilling shipping requirements outlined by the original RFP, mini freight bids are meant to protect shipping companies from failing or fluctuating markets. Flexibility is important in this domain, and mini freight bids offer scalability to save on costs while remaining competitive.
A “normal” bid is a regular RFP contract in this case. The biggest difference between it and mini freight bids is how the latter is more short-term. These are revisions or additions in transportation contracts to address current market conditions, lasting three to six months. On the other hand, RFPs help align consistent shipping needs with rates and services for the long term.
Here are some scenarios where mini-bidding may be the more sensible option for companies:
- New origin and destination pairings not included in the original RFP
- Changes in the network of freights
- Increase in demand of products
- High service failures on particular freight lanes
- Fluctuating market affecting pricing and capacity availability
Aside from helping you mitigate the effects of issues with the market or freight network, mini freight bids have other benefits. First, it can help you strike a balance between your contract and spot utilization in a specific freight lane. You’ll also enjoy lower-than-market rates for a short time and the ability to expand your network of carriers and partners.
Mini bids becoming more common place may cause bid fatigue in the market, reshaping the demand for regular RFPs. Left unchecked, this shift could diminish RFP rates in the long run. Given how mini bids are only meant for short time spans, they could be pointless in a few weeks after being implemented. This can leave companies opting for new bids that are less profitable or competitive. Getting one entails in-depth market research to maximize its benefits.
Mini freight bids present a lot of opportunities in a volatile market, and it’s the best approach to addressing issues that weren’t accounted for in the FRP. To learn more about this concept, or to take advantage of quality shipping services, contact Jansson today. We are your trusted independent Landstar agent offering comprehensive freight and shipping solutions.