Trucking capacity is currently so tight that logistics service providers are turning away record amounts of freight. Rates have been rising, and some shippers have even had to cut earnings outlooks due to rising transportation costs. Spot market rates have gone up 20-30 percent from the same period last year. With shipping costs rising rapidly and capacity so scarce, companies are going out to bid for new transportation contracts now instead of waiting.
Why go to market now?
Last year, the U.S. experienced strong holiday sales and forecasts for 2018 are even stronger. Deloitte forecasts retail holiday sales will increase 5.6 percent over last year’s shopping season with e-commerce sales expected to increase between 17 and 22 percent for up to $134 billion in sales. In a recent Forbes article, a senior retail analyst predicts that online spending will “jump $2 billion on Thanksgiving and another $2.5 billion on Cyber Monday.”
With the rise in sales along with the driver shortage and existing tight over-the-road capacity situation, it will be even more difficult for shippers to gain much-needed capacity. Quantitative data points to an increase of procurement activity even earlier this year: There has been an increase of 1,000 RFPs through the Ticontract transportation sourcing platform year over year between July 2017 and July 2018, a symptom of the unprecedented levels of increased demand. Going out to bid now—or at least planning a strategic, well-executed bid in the coming months—will allow shippers to secure the capacity they need to keep customer service levels high and avoid potential supply chain disruptions stemming from transportation shortages.
Using an automated e-sourcing tool built for transportation procurement helps shippers to:
- Uncover new providers: Supplier searches provide incomplete results due to of the lack of market transparency resulting in limited access to new carriers with which you could potentially do business.
- Speed the transportation bid process: Manual tendering is a time-consuming process, tying up resources and limiting the frequency of tenders.
- Find quality carriers: Manual tenders generate low participation rates and diminish success.
- Keep on track with security and compliance: Incomplete documentation and uncertain bidding procedures make revisions difficult.
- Sort through enormous amounts of data to meet strategic goals during bid valuation.
- Improve communication by keeping all bidders up to date with the latest information, making the RFQ process run smoothly.
Ticontract from Transporeon Group brings speed and structure to your freight bid processes. Transporeon’s e-sourcing technology, backed by an experienced team of logistics experts, cuts the overall time for launching a bid to awarding final contracts to just a few weeks. Contact Transporeon today to find out how to secure transportation now under the continuing challenging market conditions.