Automated Bidding Tools Benefit Shippers, 3PLs, and Carriers
At the start of a new year, it’s common for shippers striving for an optimized supply chain to review their carrier options to make sure they use the ideal mix of freight transportation providers. In 2019, this bidding business has lasted the entire year, as shippers and 3PLs look to take advantage of a softer freight market to secure better pricing and service.
Q: Why has there been an increase in bidding activity this year?
A: During the first eight months of 2019, SMC³ has seen a record number of less-than-truckload bid events in our Bid$ense tool. We think that’s because shippers and 3PLs see that the time is now to possibly find lower rates.
While savings are important, these buyers are also seeking to expand their provider base to ensure future capacity in advance of the next capacity crunch. We’ve found that shippers who remove the manual aspects of finding and sourcing freight transportation also receive responses from a wider net of carriers—30, on average, for a single bid event, which is significantly more carriers than the handful they might query when using manual bidding methods.
Shippers are also wary that the market could quickly swing the other way toward tighter capacity. They’re looking to quickly lock in contract rates.
Q: Since so many shippers and 3PLs are in the market, what’s the best way for them to get a good result in a bid?
A: Anything shippers can do to make carriers more efficient will help establish a lasting, worthwhile partnership. Shippers should know which carrier prioritizes what freight type in which lanes and also know that the expectations they set during the bidding process have to match the reality after the new routings are implemented.
While automated bidding tools are crucial for shipper sourcing events, the solution brings benefits to all parties involved. Carriers that receive clean, complete shipment history and future volume forecasts from shippers are able to confidently sharpen their pencils to make the most competitive offers, which can lead to shipper savings.
In fact, before the advent of bid technology tools, the biggest complaint we heard from carriers concerned the data customers submit. There was no way for them to accurately respond to a bid when data were missing and incomplete, so they simply planned for the worst. Pricing teams are very analytical and risk-averse, so their price offers reflected that planning.
When carriers receive more data from shippers, giving them a complete picture of a shipper’s freight, everybody wins.