Can Bidding For Transportation Contracts To Reduce Shipping Budgets?
Do you often wonder if you spend too much on transportation? Then the answer is probably yes. The main purpose of the bidding for transport contracts is to get the most profitable offer from the transport providers, without decreasing the quality standards imposed by your business.
The competitiveness of the current market also has many benefits, not just disadvantages. Carriers are using new technologies to keep up with the dynamics supply chain. Therefore, there are plenty of options to reduce transport costs.
- What are shipping auctions?
- What are the types of auction?
- What are the stages of the bidding process?
- How is the shipping cost calculated?
- How can you reduce shipping costs?
1. What are transport auctions?
Logistics auctions are a way to gain access to efficient services transport. Transport providers send offers for the shipment of the goods, following receiving an invitation. All process information is accessible carriers before they submit their tenders. That way, they can rely on it offer on your requirements.
Auctions can help you complete your project at a reasonable cost and in the best possible time. The contract bidding process also has downsides and downsides, both for transport providers and for your business:
|Such auctions guarantee, in the short term, a volume of transport and revenue, both for shippers and your company.||There is a possibility that the final income will not be too attractive for carriers, as they may be in a position to compromise their tariffs in favor of transport volumes.|
|As a carrier, with the winning of several auctions, the volume of Basic shipping is covered.||For shippers, planning to participate in such auctions and managing transport operations can be a lot of effort.|
|The volumes of transport gained from tenders can be used to negotiate the price of future contracts.||Once a shipping company has been selected following a tender, this may be in a position to give up more profitable operations.|
Invitations to such auctions are sent by companies in need transport operations, either through transport management platforms and contain specific requirements and criteria that suppliers must meet. Such auctions are a source of opportunities for a large number of suppliers transport and encourages competition.
2. What are the types of auction?
There are five main types of auctions:
- Open auction
This type of tender is the most commonly used in the public sector. However, this The type of procedure is used by the whole market and any transport provider can be guest. This provides equal opportunities for all carriers to compete for transport contracts.
When an auction is started, any shipping company can participate. In the In principle, the process has two main operations:
- Release of a transportation request —it is published in the public domain and whatever
Stakeholders can take part in this process. Any shipping provider can
send an offer in response.
- Award of the contract —after analyzing the bids received, the contract will be awarded the company that meets your requirements and criteria. In principle, they are compared the prices offered and the quality of the written answers.
- Selective auction
In selective tenders, only specially invited transport providers they have the right to participate. Thus, through this procedure, you have more chances to find one offer that fits your requirements perfectly.
Selective tenders are suitable for more complex, very specific operations, or for which there are very few suitable carriers. However, it must be taken into account I calculate that such an auction excludes from the start the small transport companies that are at the beginning of the road.
- Auction by negotiation
This type of tender is most common in engineering or the field constructions. Negotiation with a single supplier is suitable for contracts with very specific requirements or for the extension of existing contracts. That way, you can reduce costs and build a relationship with your shipping provider. The integration of carriers in the project team significantly improves the flow of information and communication.
- One-step auction
The one-step auction is useful when all the necessary details are available for approximation of a realistic price are available right from the beginning of the auction. Invitations are sent to transport providers, offers are also sent analyzed, the best is chosen, and then negotiations can begin.
- Two-stage auction
To enable early scheduling with a shipping provider right in advance the details needed for a price approximation are available two-stage auction. The first step is to start work following an agreement limited, while the second includes negotiating the contract price.
3. What are the stages of the bidding process?
Using a transportation management system simplifies the process. Thus, I have identified five main stages of a successful bidding process:
1. Identification of requirements
For starters, it's a good idea to analyze your needs and requirements include them in your shipping request. Important details about transport, such as type of cargo, quantity and destination of delivery. Such details must be communicated to the transport providers so that they can make a corresponding offer.
2. Creating the transport request
Directly from the platform, the application can be created by adding details about your company, about the proposed delivery and other additional requirements. All providers of transport should have enough information about your operation to be able to make an offer that meets your requirements.
3. Starting the auction
Once the application is launched, the transport providers within the platform are informed regarding your request. In addition, if you are already working with carriers that do not use the platform, they may be invited to participate in the auction.
4. Offer analysis
After receiving the offers, they can be analyzed to see which ones fit better with your requirements. Usually, the price offered makes the difference, but they can be also checked the profiles of the transport providers to see if they are reliable.
4. Offering contracts
Finally, after finding the carrier with the most profitable offer, the contract can be awarded. The shipping process can begin once established the latest details with the transport provider.
4. How is the shipping cost calculated?
It is good to be able to propose an appropriate price limit for transport auctions to know how shipping costs are calculated. No need to know the exact price, but an approximate value of the shipping operation can be helpful.
First of all, it is good to know the weight and size of the goods you want transport. They influence delivery rates. The weight of the transport determines the type of truck required for delivery. Also the type and quantity transport influences the final price.
The transport requirements must then be taken into account. For example, if the goods must be maintained at a certain temperature during delivery, the final price may increase.
Another important factor is the final destination of the transport or, more precisely, the distance Delivery. The longer the journey, the higher the transportation costs big.
In addition, the fragility of the goods can influence the final calculations. The transport company will take into account the packaging of the goods, their size and fragility. With the more difficult it is to handle the cargo, the more the transportation costs could be grow.
There are a lot of variables that can influence the final price of a shipment. If if you want a professional opinion, you can request an offer from a transport company or you can use an online shipping cost calculator for an estimate.
5. How can you reduce shipping costs?
In addition to transportation auctions, there are other ways to cut budgets dispatch. For example, the packaging of goods can be made more efficient. By this it is can save more space during transportation and, as a result, fares delivery may be reduced.
Another strategy is the rarer organization of transportation. Shipment of a quantity Larger freight in a single installment may cost less than shipping volume, several times. This is because carriers can load the goods in a more efficient way, without wasting time processing more deliveries. However, inventory management costs can offset the savings made with transport.
Also, if the type of goods allows it, you can avoid the transports in time peak season to significantly reduce costs. Plus, another trick to saving on budget is the use of trucks that return unloaded to the base.
When it comes to budgeting for logistics, there are plenty of opportunities improvement. Especially for transport costs, contract bidding is one one of the most effective ways to cut budgets. However, it is good to inform yourself in advance and know the process in detail to have an auction with success.
To experience first-hand the way auctions in the field of transport I can change your shipping budget, you can request a demonstration at any time free for CargoPlanning . In a discussion with one of the specialists you can see how the auctions are organized and you can better understand the benefits brought about by this process.
CargoPlanning is a platform dedicated to production companies for transport process management.
If your business deals with logistics, you are probably aware of the benefits of one transport management system. From improving the planning process to increased transparency and a better customer experience, such platform can take your company to the next level.
In surveys conducted by Statista, both in 2020 and in 2021, it has been observed that most consumers prefer same-day delivery for placed orders from online stores, but also physical. However, mainly because of new challenges brought by the pandemic, delivery in 1-2 days has become a standard.