What are the Challenges of the Freight Bidding Season in 2024?
The annual freight bidding season is upon us, and 2024 comes with its own unique set of obstacles. We are still feeling the hangover effects of COVID on consumer spending and supply chain disruption. Shipper volumes and carrier capacities have rarely been in equilibrium at any time over the last 3 years.
In 2023, shippers took a price focused approach to bid season and forced carriers to respond quickly to a changing rate environment that left heads spinning. So what’s in store for 2024?
Securing competitive rates and reliable routes is always the goal, but navigating the bidding process is a complicated process. We’ll delve into the most pressing issues facing the freight market in 2024 and offer actionable strategies to help you operate a best in class transportation network.
Top freight bidding challenges
Challenge #1: The Rise of the Capable Carrier
Since there is less chaos in the overall supply chain and lower volumes, there is an excess of carrier capacity. It means that there is more equipment availability and less service issues. Carriers with existing contracts are over-serving clients to retain business.
It creates a conundrum: do we reward loyal and high-quality performance during bid season, or leverage the market’s generosity for better deals?
Key Point: Before launching a bid, understand the current market and the direction it’s headed. It will help you craft a well-thought out carrier strategy to determine your bid’s execution.
Be clear on your desired outcome – volume shifts, specific carrier partnerships, or simply the best rates. Having a strategy can make a difference in bid execution and the final results.
Challenge #2: The Data Dilemma
The past two years have been wildly inconsistent with volumes. 2022’s frenzy led to inflated forecasts in last year’s bids. In reality, 2023 predicted volumes didn’t materialize and retailers had bloated inventories.
Having an accurate forecast is crucial to making the right bid. Carriers will provide you with industry leading rates if you have accurate data.
Shippers will need confidence for their 2024 forecast. Will volumes climb, plateau or dip? Do you plan on caution with volumes? Analyze multiple scenarios and review your data to make the best bid.
Key Point: Accurate data is the foundation of a stellar freight bid. Carriers reward confidence with better rates if they have realistic, well-researched forecasts.
Challenge #3: Contracted vs. Spot
Last year, plummeting international and domestic rates saw shippers combine fixed contracted pricing while taking advantage of spot market dips.
In 2024, rates are continuing to see rates at an all-time low. However, there are whispers of a potential volume upswing in the latter half. It could lead to rate increases.
As part of your strategy, you should have a plan for how to handle this possible rebound in freight volumes and pricing. Will you lock in a contract for direct pricing or play the spot market?
Key Point: Your three-year supply chain management strategy holds the key to structuring your bid priorities. Perhaps 2024 is the year for maximum flexibility.
You can align your freight bid or RFP with budgetary cycles through strategic, fixed-rate periods. For example, you could lock in a fixed rate for 3 or 6 months and have flexibility later in the year.
Additional considerations with your freight bids
Challenge #1: A Shifting Market Landscape
Shippers face a volatile market with fluctuating demand and unpredictable freight rates. Additionally, rising fuel costs and inflationary pressures put a squeeze on both shippers and carriers. It impacts competitive rate offers and potentially disrupts existing contracts.
Key Point: The 2023 economic slowdown continues to influence market conditions and shape the freight bidding process. The uncertainty makes it difficult to forecast future needs and secure stable contracts.
Challenge #2: The Evolving Role of Load Boards and Freight Bidding Sites
Digital freight matching platforms are rapidly transforming the bidding process. A freight bidding site provides increased transparency and efficiency. While this can be advantageous for both parties, it also introduces new challenges.
Key Point: Shippers must adapt to a fast-paced, data-driven environment where market rates can change in real time.
Challenge #3: Balancing Cost and Capacity
In a cost-conscious environment, securing the lowest bid often becomes the top priority for shippers. However, this can lead to overlooking crucial factors like a carrier’s capacity and reliability.
Key Point: Bidding solely on price can result in missed deliveries, damaged goods and ultimately, higher business costs.
Challenge #4: The Rise of Spot Market Volatility
While long-term contracts offer stability, some shippers rely on the spot market for flexible shipping solutions. However, the 2024 spot market is expected to be more volatile than ever, with frequent price swings and unpredictable capacity.
Key Point: Spot market volatility creates a risky landscape for shippers. It’s difficult to plan and budget for transportation costs.
Challenge #5: Navigating a Complicated Freight Bidding Process
The freight bidding process itself can be complex and time consuming, especially for new entrants. Shippers also need to consider factors like shipping requirements, carrier reputation and specific lane demands when placing bids.
Key Point: Understanding load-board etiquette, crafting competitive bids, and navigating various services offered by different brokers and platforms can be overwhelming.
Strategies for a Successful Freight Bidding Season in 2024
Despite the challenges, there are numerous strategies you can employ to navigate the 2024 freight bidding process with confidence. Here are some key pointers for shippers:
- Use market rate data: Leverage market rate data and insights from trusted sources to make informed decisions on bidding and contract negotiations.
- Diversify your carrier network: Don’t put all your eggs in one basket. Develop relationships with multiple reliable carriers to mitigate risk and ensure access to capacity.
- Focus on long-term partnerships: Prioritize building strong relationships with carriers based on mutual trust and understanding. Consider multi-year contracts for guaranteed rates and improved service.
- Embrace load boards: Explore load board platforms that offer efficient load matching and real-time market data to optimize your bidding process.
- Be transparent and communicative: Communicate your shipping requirements and expected outcomes to potential carriers. It helps avoid misunderstandings and ensure a smooth partnership.
Optimizing Your Bids and Proposals
Crafting competitive bids and proposals is essential for both shippers and carriers to succeed in the freight bidding season. Here are some tips:
- Accurately estimate costs: Carefully factor in all expenses, including fuel, tolls, permits, and any additional services, to avoid undercutting yourself or overcharging shippers.
- Highlight your strengths: Differentiate yourself from the competition by showcasing your unique capabilities, experience and track record.
- Offer competitive rates: Research current market rates and offer pricing that is both attractive to shippers and profitable for your business.
- Be clear and concise: Communicate your offer in a clear and easy-to-understand format. Include all relevant details, such as pick-up and delivery times, routes, and insurance coverage.
- Be realistic and responsive: Respond promptly to inquiries and be flexible in your negotiation. Show shippers that you are serious about working with them.
Seek Professional Advice from a Freight Broker for a Successful Bidding Season
If you need help navigating the bidding process, consider consulting with freight brokers. A freight broker works as an intermediary between shippers and carriers. Freight brokers can act as a partner for the bidding process.
At Armstrong Supply Chain Services, we provide tactical execution of the bid process, strategic expertise in market intelligence, and unique negotiation strategies that ensure you meet your goals and create lasting carrier partnerships. We also cater to transportation and warehousing needs for requirements, especially with liquor transport.
Partnering with the Armstrong team can help you manage the bidding process. Our team is led by logistics experts who can match reputable carriers with businesses. Joining our carrier network can make it easier to approach the 2024 freight bidding season with confidence.
The freight bidding season is a marathon, not a sprint. By being prepared, adaptable, and willing to partner with others, you can overcome any challenge and achieve your business goals.
