Recent years have brought far-reaching changes to the freight transport and logistics industry: a volatile market, reduced capacity, widespread labor shortages, and increased demand. But one thing that's remained just as challenging throughout? The RFP creation and response process for dedicated carriers and 3PLs on one side of the equation and shippers on the other. With so many complicating factors, it can be difficult for dedicated carriers/3PLs to accurately provide their best rates, and for shippers to assess their ability to deliver.
As capacity has decreased and shippers are looking for more specialized service amid a continued boom in e-commerce activity, efficient RFP creation and bid responses have become even more of an imperative. The Journal of Commerce’s 2022 Outlook for Trucking Logistics reports, “Contract truckload rates are set to rise by high-single- to low-double-digit percentages this year, according to analysts and trucking executives, and they don't foresee any pricing swing in favor of shippers.”
Bloomberg recently reported that in January of this year, “the costs of transportation and warehousing goods for final demand climbed another 1.4% in January from a month earlier,” and that, “the Labor Department’s [Producer Price Index] gauge was up a whopping 16%, the largest annual advance in data back to 2009.” Moreover, “the data showed an 18.3% jump in shipping by truck,” establishing a new record high.
As those rates increase for shippers, so has the competition for dedicated carriers and 3PLs, with the introduction of thousands more small trucking companies year after year. How can a revitalized RFP process help ensure all parties are finding the capacity and revenue they need to stay competitive?
The Challenges of RFPs & Bidding
The Request for a Proposal (RFP) process is one by which a company solicits bids from potential partner companies to establish a contract and accomplish a given task for a given price. In the case of the freight transport and logistics industry, shippers (who produce goods, but do not have commercial vehicles to transport them) regularly search for dedicated carriers/3PLs (who have commercial vehicles and transport goods) who they can pay to move goods from one location to another.
The shipper creates the RFP with expectations and questions about performance and price, and the dedicated carrier/3PL responds to the RFP with a bid that addresses the questions and provides the price for which they would do the work. After an extensive review process, the shipper selects a company from among a pool of competitors and awards the business at their price.
Though both dedicated carriers/3PLs and shippers depend on this process to keep their businesses running, there’s very little standardization or consistency across the industry and as a result, the RFP process can be cumbersome and frustrating. Successfully navigating this process typically takes a lot of time, with analysts on both sides struggling to track data and gain insights that can help generate a good RFP or accurate bid. And when the costs of doing business are in flux, it’s difficult for dedicated carriers and 3PLs to quickly and accurately respond to new opportunities and RFPs, and it’s difficult for shippers to get a clear picture of how their transportation spend is impacting profitability.
So, how can businesses adapt? How can dedicated carriers and 3PLs better organize their data and outperform their competitors and decrease bid response times? How can shippers gain the insights and transparency they need to make the right choice of partner? Technology solutions like Appian are the answer.
Three Ways Appian Improves the RFP and Bidding Process
Simply put, commercial maps and navigation tools differ from consumer-grade products because they factor in the physical risks and regulatory considerations described above.
- We Help Dedicated Carriers/3PLs Right-Size Their Bids
For dedicated carriers/3PLs, responding to a high number of bids quickly and accurately is critical, but to do so, they need to have a clear understanding of their operation, its performance metrics, and its capacity to take on new business. They need an accurate model of existing customers, routes, drivers, and assets and from there, they can then look to evaluate how new customers and order volumes will best fit into their network, while considering time windows, priorities, equipment requirements, or driver hours.
Appian’s routing and asset management tools organize your imported data to streamline the process of estimating the number of drivers and vehicles needed for the most cost-effective routes. Our scheduling tools give more accurate estimates of how much it could cost in time and miles to deliver freight to certain locations, so dedicated carriers/3PLs don’t under- or over-estimate drivers and vehicles.
We take the guesswork out of fleet sizing and driver requirements by identifying under-utilized fleet equipment and non-value added driver hours to maximize efficiency and profitability. On average, Appian reduces both hours and miles by 8-20%.
And once your data is in Appian’s analyst tools, it’s easy to accurately compare realistic “What if?” network scenarios to rearrange or reduce driver hours, evaluate the impact of shifting delivery windows or stop orders, and reduce operating costs over time. In short: we make it easy to see what an operation is capable of handling on any given day and increase efficiency and productivity as a result.
- We Help Shippers Plan RFPs & Analyze Responses
For shippers, creating RFPs and searching for a partner who can safely and efficiently transport their goods requires historical knowledge about their customers, as well as a model to which they can compare the bids they receive and determine their legitimacy. Appian can be a microscope through which shippers are better able to analyze an RFP response.
With the ability to quickly import a response’s data from Microsoft Excel into the solution, shippers can easily compare bids without the need for cumbersome spreadsheets. And by drawing on that historical data, shippers can gain a clear understanding of how many trucks are needed to cover a given number of lanes, frequencies, locations, etc. and have a baseline number to inform response evaluation.
Once a dedicated carrier or 3PL has provided their bid, Appian can provide invaluable insights into those companies’ existing networks and their ability to take on new business, enabling shippers to make better decisions about who deserves to win.
- We Help Both Dedicated Carriers/3PLs & Shippers Move Fast
For both dedicated carriers/3PLs and shippers, time is money. When it comes to creating RFPs, it’s vital that shipper analysts be able to quickly pull the historical data they need to build a new RFP that will attract the best partner at the right price. When responding to RFPs, accessing accurate operational data is crucial to helping dedicated carrier and 3PL analysts quickly submit bids.
Appian’s spreadsheet integration makes it easy to clean data and bring it into a standardized working environment. But even with a clear picture of an operation’s capacity and resources, it can take days to plan a schedule, optimize routes, consider unexpected changes in asset capacity or driver availability, and then combine all of this information and Sales team feedback to model scenarios and prepare the final rate and bid. Appian can model scenarios in a matter of minutes—with an average 70-90% in planning time—thereby making it fast and convenient to modify constraints and revise solutions.
Time no longer needs to be wasted when accounting for changing resources, lanes, customers, vehicle capacity, and unforeseen expenses, such as loading and unloading times, dwell and detention fees, and fluctuating fuel prices. If a business has a data set it would like incorporated into their analysis, Appian can account for that data and make it easy to consider while creating an RFP or responding to an opportunity.
When it comes to commercial transportation and logistics, success depends on a company’s ability to balance a seemingly infinite number of variables. Supply chains, costs of labor and goods, customer expectations and satisfaction, contract bidding and competition. Given recent challenges, it’s more essential than ever that dedicated carriers, 3PLs, and shippers use purpose-built tools like Appian to help streamline the bid creation and response processes, optimize their operations, and increase their profitability.
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