Many companies have already concluded their transport contracts for the 2020 calendar year, while others are still in the process of negotiating the best possible conditions for their routes.
How are you doing in your search for fair contractual conditions and suitable transport service providers? Have you noticed any differences from last year, and has the increase in transport capacity affected your company?
Following the capacity shortages throughout 2017 and 2018 in many European countries, transport prices again fell noticeably in 2019 . Shippers can benefit from these favorable conditions by taking current transport market developments into account and capitalizing on the full potential of their transport tenders.
We asked two experts what shippers should look out for when going out to market for transport contracts, what information service providers need for optimal bid preparation and why it is never too late to tender transport contracts - even during the year.
Günther Pflaum, as head of shipper consulting at Ticontract, you are familiar with the needs of shippers. What opportunities do companies currently have to negotiate new or better contracts with existing service providers or to expand their network of service providers?
Unfortunately, there is still a lot to be said about individual negotiations via telephone and e-mail. If you want a real price-performance comparison, you have to contact many service providers in this way. It can be confusing and time-consuming, and take several weeks to complete the analysis. For comparison: An average tender via the Ticontract tender platform only takes two weeks.
How does a tender work via the Ticontract platform?
The shipper publishes the requirements for its transports on the platform and invites suitable transport service providers to participate in the tender. Before launching the tender, the shipper has the option of filtering the service provider search again via a Request for Information (RFI) and customizing it according to the shipper’s needs. The transport service providers then submit their offers.
How many tenders do shippers launch on average via Ticontract? Are there peaks in which there is a particularly high number of tenders?
Every day, we record around 200 tenders on the platform, with a cumulative total of around 16,000 per year, which is always increasing. These figures are difficult to break down individually because they depend on the size of the company, the radius of action and the resulting needs of the shippers. What we are observing is that there are no longer any classic peak seasons or seasonal lows, such as the summer slump, for example, in which the number of tenders declined until a few years ago. A slightly higher volume is still evident in the fourth quarter, as many companies are strategically inviting service providers to tenders for the coming year. In general, however, shippers now seem to tender all year round and the peak season is now, for the most part, throughout the year.
What are the advantages of tendering contracts during the year?
Shippers are increasingly adapting to the respective transport market situation in order to catch the best time for good offers. The market has become progressively volatile in recent years and is no longer subject only to the mechanisms of supply and demand, but dependent on global and regional conditions, economic fluctuations, commodity prices and much more. Seasonal characteristics, such as a classic summer slump or the winter lull we have seen in the past, are now limited. This naturally has an effect on transport prices and capacities. Shippers take advantage of the opportunities to tender when the market holds the greatest potential. In 2019, for example, capacities were relatively high all year round and prices were lower than in previous years in many European countries, which means that those who use exactly such periods for their tenders can expect the most favourable conditions for their orders and can also expand their network of service providers at the same time. This requires a certain degree of flexibility in planning, but those who are prepared not to completely cycle through the calendar year at the end of the previous year have a good chance of receiving better offers.
In your experience, what should companies take into account in their tenders in order to obtain the best possible offers?
It is very important to tender in line with the market. A tender must be systematically and logically structured and easy for the service provider to understand. Carriers need clear information on the transport requirements, including the quantity, volume and type of goods; the required equipment; load securing and much more. So that shippers don't lose track, we give them an orientation checklist with the most important points that should be considered for tenders right at the start.
We also advise companies to communicate fairly with carriers at all times, especially with regard to price and transport requirements. The effort that the carrier has to put into preparing an offer must be reasonable in relation to the tendered transport volume. Should shippers be uncertain in the tender or have questions at this point, our customer support team will be happy to advise them.
Moreover, companies should not be afraid to invite new transport service providers to tender in order to be able to better compare offers and to recognize and use existing potential. Many shippers still have great respect for this, as they do not want to alienate their existing service providers by including the competition. As a precautionary measure, long-serving incumbent carriers should also be invited to tender if their profile meets the requirements. We even get feedback from our shippers that this combination of 'old' and 'new' often gives them the best offers.
Let's talk about the carriers: Anne-Lisa Hartmann, you are head of customer care at Ticontract and communicate regularly with the transport service providers. How do carriers take advantage of the opportunity to participate in electronic tenders?
We are observing a steadily growing interest among carriers. In the past year alone, the number of transport service providers participating in tenders via our platform has risen by 10%. Over 35,000 freight forwarders are now registered with Ticontract. The shippers benefit from this, of course, as the variety of offers per tender increases. For carriers, participation in tenders is usually free of charge and is normally easy to handle. In addition, carriers usually participate in not only one but several tenders, which increases their chances of winning an order. A recent survey of more than 1,000 European transport companies showed that transport service providers value participation in electronic tenders. Most transport companies stated that tendering platforms such as Ticontract make participation in tenders easier and more efficient.
In your experience, how do shippers have to design an RFQ (Request for Quotation) so that carriers can create tailor-made quotations?
The so-called tender matrix must be filled in as precisely as possible because the carriers must know exactly what to expect from a possible order. The more completely the requirements are formulated, the faster and more precisely the carrier can submit an offer. It is very important that the carrier has a reliable contact person on the shipper's side. A tender is most likely to fail due to the lack of a contact person for queries, especially with new service providers. International transports should also be tendered in English if service providers from abroad who do not speak the local language are also invited.
Carriers are usually invited to tender by shippers. Is it possible for carriers to actively offer services to a shipper?
Carriers have the opportunity to present their service profile to shippers on the Ticontract platform via an additional service called Carrier Premium Account , which allows carriers to view public tenders and RFIs, and to participate in tenders even without the explicit invitation of the shippers. In addition, they can observe tendered routes that have so far only been offered below average and, if it corresponds to their offer portfolio, apply for them. This service is becoming increasingly popular with carriers, and shippers are also benefiting by expanding their network of service providers.
If shippers or carriers are interested in using an electronic tendering tool such as Ticontract, what does the implementation process look like?
Pflaum: Ticontract sets up an account for shippers who decide to use the platform, which can be quickly activated within one day. Following this, there is a training session and then the user can get started with the tender. The entire implementation process does not involve any major effort on the part of the shipper.
What about the transport service providers?
Hartmann: Any carrier can register with Ticontract easily and free of charge, either proactively in search of new orders or at the invitation of a shipper to a tender.
Registration is easy and only takes a few minutes . It is important that the carrier fills in the company profile as accurately and completely as possible. The more complete the profile, the higher the chance of being found by shippers. After registration, Ticontract support checks to see whether the company profile has been completed in full to guarantee the quality of the carrier pool for the shippers. As soon as the first invitations arrive via the platform, forwarders can submit their applications.