A Dynamic Market Requires a Dynamic RFP Approach

In more stable freight markets, most companies characterized themselves as either a contract shipper or a spot shipper. Some organizations, with predictable shipping patterns, preferred to consistently lock in quarterly or annual contract rates. Other shippers liked to remain agile, grabbing capacity on the spot market as needed to meet variable demand, product seasonality, or the occasional capacity gap. 

But today smart shippers are using a hybrid, customized RFP approach that’s more dynamic in nature, combining spot and contract carriers in a flexible manner. 

Given today’s volatile rates and capacities, who wants to limit themselves to only static bidding cycles and long-term contracts? If rates go down, you end up paying too much. And if rates go up, contracted carriers can still reject your loads and move to the spot market. As your transportation plans and routing guides are disrupted, you may also end up in the spot market, paying high rates to unknown, untested carriers and hoping for the best.   

Similarly, it rarely makes sense for shippers to only rely on spot markets in today’s volatile freight landscape. While it might be a shipper’s market today, with lots of capacity and low spot rates, conditions and trends change quickly, even on a weekly basis—and spot shippers may find themselves in a carrier’s market with high rates and no control over their spend. 

Dynamic RFPs: Lock In, While Also Remaining Agile  

Based on Redwood’s two decades of experience and hundreds of customer success stories, we believe in taking an innovative, more fluid approach to RFPs. Many shippers are achieving the best of both worlds, and creating an optimal balance between service and cost, via a dynamic RFP approach. 

For shipments that are predictable in nature with a frequent cadence, one pick one drop, and no specialty requirements, as well as shipments to high-priority customers, from critical suppliers, static contracts and longer-term RFPs still make sense. If you can’t afford to miss a critical shipment or disappoint a key customer, then it’s only logical to lock in rates and capacity on an annual or quarterly basis. 

For shipments that are more variable and less scheduled, shorter-duration RFPs that go out to spot carriers are a good bet. Let’s say you own a lot of your own assets, and only occasionally need extra capacity. Or you’re not sure exactly when inbound ocean shipments are coming from suppliers. Or you often face sudden demand spikes. Locking into a long-term contract, with fixed rates, doesn’t make a lot of sense. Especially in a shipper’s market, you should stay agile and use short-duration RFPs.   

In today’s market, Redwood recommends a dynamic RFP approach that combines quarterly or yearly contracts with shorter-term RFPs or mini bids that span 30, 60, or 90 days. The entire procurement process becomes more fluid and agile, often shifting on a weekly or load-by-load basis as capacities and rates change. 

Ensure Your RFPs Are Built for Success 

At Redwood, we’ve seen many shippers use this approach to optimize their cost and service results, while keeping risk exposure to a minimum—and still covering all lanes. The exact mix of contract versus spot, and long-term versus short-term, will depend on your business model, shipping frequency, product characteristics, seasonality, special handling needs, and other factors. There’s definitely no “one size fits all” RFP process in today’s unpredictable freight landscape. 

Whatever the dynamic RFP process looks like for your business, today it needs to include these components to make it most effective: 

• RFP automation with intelligent tools. If you’re still running freight procurement through emails and spreadsheets, you may be wasting time and losing visibility. Modern procurement software centralizes your process, manages providers, and makes rate discovery simple. With a secure dashboard, you can track spend, benchmark rates against market data, and stay up to date on carrier compliance and insurance, all while handling a complex freight market with less effort.

• Proactive contract negotiation.  During your negotiations, look beyond freight costs to also assess carrier reliability and compliance before signing a long-term agreement.

• The use of real-time bidding and reverse auctions. Today you have a full range of advanced solutions available to help you leverage the speed, ease, and transparency of real-time bidding and reverse auctions. These proven practices can drive your costs down significantly.

• An expansion of the carrier network beyond incumbents. We get it, most shippers have preferred carriers and long-standing relationships, but the market offers far more. By looking at well-established, credible transportation partners with broad capabilities, you can cover all your shipping needs while gaining flexibility. The goal is to build the right carrier mix that balances reliability with cost-effectiveness. 

Change Happens Fast. Stay Ahead of It. 

In the time it took you to read this blog post, freight conditions changed. Instead of fearing today’s volatile environment, embrace it—and earn a significant advantage over less-savvy competitors. Don’t stick to static procurement cycles, hand-crafted RFPs, manual bid analysis, and an incumbent carrier mix in a world that’s been dramatically transformed. Instead, transform your RFP process for success.  

Contact Redwood to learn how our full range of capabilities can make your RFP approach more intelligent, more agile, and more profitable.