The COVID-19 pandemic has provided an opportunity for shippers, brokers, and carriers to experiment with new ways to match truckload capacity and demand, and to do so quickly. Initiatives that ordinarily would take months or years happened in rapid fashion.
As a result, we’ve seen three big changes in the truckload request for proposal (RFP) process in a short period of time.
First, this is the age of continuous procurement. In 2020, the number of weeks that the 150-plus shippers in DAT iQ’s Freight Market Intelligence Consortium (FMIC) entered new contract rates on more than 100 lanes doubled from the historical average. This suggests that procurement has become an operational function, rather than a purely strategic process.
Second, these off-cycle RFPs or “mini-bids” aren’t just smaller versions of an annual RFP. Mini-bids are focused, simpler, and intended to find reliable capacity fast, while an RFP is more exploratory and open-ended.
Finally, the role of spot rates has grown well beyond simply a last resort for when a shipper’s routing guide fails. Auto-tendering to sophisticated brokers using application programming interfaces (APIs) and real-time “rate guardrails” is a better method for procuring capacity on sporadic, inconsistent, and low-volume lanes than showing them in an annual RFP. DAT analysis shows that for most shippers, any lane that has an average of 12 or fewer loads in one year has a 40 to 70 percent probability of being terminated the next year. Dynamic procurement methods save time and valuable resources.
The annual RFP isn’t dead, but it’s not sufficient by itself anymore. The practice of continuous procurement, using a combination of both mini-bids and dynamic rates, accelerated during the pandemic and will be standard practice after the pandemic recedes.