How to respond to an RFQ?
Responding to bids is one of the many things we do to fill trucks. Call them what you like — tenders, RFQs, RFPs — they really amount to nothing more than an auction of a company's loads. Until now, our reaction to an RFQ has always been the same. We spend a ton of time and resources creating a detailed proposal with every compelling reason why that company's freight should be on our trucks. Then something happened that made me realize we've been doing it all wrong.
I got an RFQ from a transportation manager who apparently doesn't know about blind cc'ing his email. It was distributed to 173 industry players, and he wanted numbers on more than 300 lanes. I had a week to complete the task.
So I sat back and took stock of the RFQ process and concluded that maybe it's time to put an end to this age-old practice. When you're one of 173 bidders, what are the chances that your well-reasoned response will even be noticed? In fact, I can't remember the last time we picked up a good piece of new business from an RFQ.
I wrote Johnny Prospect a response that I almost guarantee was different from anything he would have received from the other 172 transportation “providers” invited to participate in this exercise. I told him there would be no numbers this time around. Instead, he should consider a few things before he sends out another blanket request.
Cost drivers
Customers control their prices almost as much as we do. Payment terms, days of the week you ship, consolidation of shipments, technology — all are factors that impact costs.
With complete and quality information, we can drive costs out of the transportation equation. Without it, we have little choice but to quote high to cover our butts. Unfortunately, there's no faster way for your proposal to find the “reject” pile.
By working together, shippers and carriers can identify and eliminate inefficiencies that drive costs and rates up. Alone, truckers can only get rates to a certain level. We need help to find the gravy that isn't on page four of the annual bid package.
Sustainable relationships
Long-term freight solutions aren't as cheap or easy to find as they once were. Most truckers aren't sprinting to the bank to borrow cash to add capacity to their fleet. We've learned that having 20 extra loads a week is more profitable than having 20 extra trucks a week. In the current market, I'm not convinced it's possible to provide a sustainable solution when the shipper only wants the lowest-priced option.
All the rules
Every bid has verbiage that explains the rules of engagement, i.e., the commitments you have to make if you want any chance of getting invited to the prom. Shippers may think these obligations help control costs when in many cases they do just the opposite. These days, more truckers are sourcing loads on one of the many online boards that pay better coin with no rules. It seems to be working for them.
Not long after I sent my “Dear Johnny” letter, I was pleasantly surprised by the reply. The Ivory Tower wanted to arrange a “fact-finding” meeting with the person who actually decides who hauls the company's freight.
Kudos to those who find RFQs to be an effective way to get business. Personally, I prefer meetings where it's me and the shipper talking about what we can do for one another. My chances are far better there than in Johnny Prospect's inbox.
Mike McCarron is managing partner at the MSM Group of Companies, which specializes in transportation and logistics service between Canada and the United States.
