RFQ

My biggest beef is they all want rates that you can get to if you can extrapolate over 5 years, but they'll only guarantee the work of 12 months. The other laughable part is the request for an "all in" rate ... as if massive swing in fuel pricing over a few months has never happened before.
On the upside ... it's going to get real fun in the next few months. "What do you mean you can't wait at Walmart for 9 hours?" ... LOL
 
Companies that do wide scale RFPs are looking for exactly that -- leverage. Generally with RFP driven customers, they are tying you down to rates for a particular amount of time. So depending what the lane is, it may be volatile and I'll make extra profit during some of the year and actually lose money on shipments during other times. The companies issue is not that they don't want to pay -- it's that they don't want to play the spot market. The vast majority of this freight moves with asset based carriers and yes, the big brokers ... and they let those players shake everything out during the year. If the providers see they need to adjust up/down based on AGGREGATE conditions, they do it at bid time or if it's really a problem they may cancel their contracts ... but it's burning a bridge so generally it doesn't happen. The value of the brokers to the big shippers is to execute whatever needs to execute on the spot so they don't have to. Most companies don't have the resources to do it when they are moving big volume, and the economics of having more people do it at the shippers' end isn't there.
 
Also remember they are pretty much all Publicly Traded Companies they have to do this for shareholder value. We have been with 1 company for 15 years that is a multinational and our lanes are awarded to a different major US carrier every year but they cannot meet their needs so we keep the lanes year after year but it is all for show.
 
Just a follow up to this whole RFQ thing. Just finished the first go around with the "consultants". It has become very obvious to me, that this entire exercise is nothing more than a race to the bottom, in terms of rates. The fact that we have provided excellent service for close to 20 years, at rates that the customer was always happy to agree to, now means squat! This idea that all of the services and rates that a carrier or a broker provides can be put into some sort of "magic blender" and out pops this neat little box with a big red bow on it, is ridiculous! Yes, you can quantify rates, costs, mileage and pretty much anything numerical, but I have yet to see a software program that can do the same for service. Regardless if you are a broker or a carrier, service is what we all provide. That's my rant on a rainy day, but my lingering fear, is that this process will continue to be successfully sold to upper management throughout our industry, as the ultimate cost saving exercise, with little or no attention paid to the level of service they will ultimately receive.
 
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Kind of Michael. Long term transportation manager, who had been in that position for decades, retires. US- based head office logistics department, and upper management get approached by a well know transportation consulting/management firm who sells them on this idea that they are capable of re-inventing the" transportation wheel" through their "hocus pocus" proprietary software system, all at a great savings to their transport budget. As is usually the case, the front line staff (the ones who order the trucks daily as needed and load them) are not consulted or involved in the process, because that would just make too much good sense. It is exasperating trying to explain to the computer geek analysts, that transportation, unlike his software and I-pad, is not an exact science and very rarely runs like a well tuned Swiss watch. From what I have seen of this "magical" analysis so far, it is nothing more than who offers the lowest rate on a particular lane, something any high school student, competent in math could do. Which lets me out! Oh the joy of transportation!
 
Ahh ... they have BCS ... Bean Counter Syndrome !!!
Instead of replacing the retired fellow, who actually has a sense of logistics management, with another actual person that requires a wage, and benefits, and that is susceptible to the common cold, flu, food poisoning, and WTFHFLTADOF absences. We are all well aware that the majority of applicants for these jobs have no concept of hard work, nor do they have any semblance of a work ethic. Senior management knows this as well, so an executive decision, the lesser of two evils, was made to fill the position with a robot, a.k.a. computer, that is a one-time cap-ex and ongoing maintenance cost, but it never takes a day off. It's a lot like leasing a car. Unfortunately for you, and by extension, us (meaning carriers in general), it will take management 18 to 24 months to realise the error of their ways, and fix the problem.
In theory, all logistics can be managed by a computer program. In a perfect world even a poorly written program will have moderate success. What a computer, or piece of software, cannot factor is the volatility of the supply chain, which in turn makes the computer and its accompanying software little more than a collection of transistors, plastic, and steel, and a random assortment of bits and bytes.

A friend of mine made her bones by preying on (maybe not the best word, but you get the idea) companies that made similarly poor decisions in terms of managing their logistics operations, and these were Fortune 500 companies.

At the end of the day you're probably looking at losing a significant amount of business, at least over the short term. There's probably very little, if anything, you can do about it. It sucks. I know. I've been there. More than once. It's hard on your pride, but no one ever made ant money off their pride.

I honestly have no clue who you really are, but I am assuming you are the leader of your company, and if you want my humble two cents worth, here it is;
1) Include your significant other. He/she is going to have to take on a bigger leadership role in the family.
2) Prepare your people. They will save you. Let them know a significant change is on the horizon. Keep them informed, and let them know the very last thing you will do is put them out of work. You will be surprised how many of them step up to the plate and take one for the team. Those that don't you don't want around anyways.
3) Get it right in your mind that you are going to have to go back to work. Hard work. 24/7 work. Might as well cancel your Friday afternoon golf games right now. Apologise to your kids because you're not going to make Wednesday night soccer either.
4) There is truth in the old adage that when one door closes, another opens. Embrace that thought.
5) Stay positive. Don't show weakness. Never let "them" see you sweat. Make like a duck ... calm on the surface, paddling like hell below.
6) Take a page from my friend above's book. Standby to leap into action.

None of that is likely anything you didn't already know :)

One final thought ... This industry, all of us, unless you're a complete a$$hole, are all one big happy family. We may prey on our own during the day, but we all sleep in the same cave at night.
 
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Certainly all those thoughts are rattling around in my head already Michael, and your basic assumptions are indeed correct. If there is any "silver lining" to all this, the customer's volume with us has been declining over the years due to organizational changes, plant movements, all the usual stuff. I was intent however at maintaining what little we did have left and maybe grabbing an extra lane or two that we had never quoted on before. Had all of this occurred a few years ago when this customer made-up a substantial portion of our business, it would have been disastrous. As it is now, if the business disappears, the damage will be more to my pride than our bottom line. I fully agree that in the months to come, we stand a better than 50/50 chance at regaining some of it (if we do lose any). There will be too many service failures with the low rate providers, and in the ensuing panic, the powers that be will go to the front line staff for help. Funny how the day-to-day people have a much better grasp of who does what best. See you in the cave around 6, save me a dry spot will you?
 
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@loaders, yep...all about the lowest rate and never enough consideration given to service levels. I feel your pain even though I'm not in transport.
 
I sure miss the "old days" when you would offer a rate to a shipper, they would hum and haw for a few minutes, ask if you could do a little bit better and you would drop the rate 50 bucks (knowing ahead of time that you would do it anyways). They walk away proud of their negotiating skills having successfully beaten you down, and you got the rate you need. Talk about a "win/win" situation! As Archie Bunker and Edith used to sing...."Those were the days".
 
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Reminds me of a shipper I spoke to years ago. I quoted him a fairly high price (because I really don't want low rate business I can't move) and he laughed and said that my rate was higher than the others, but as a former trucker, he told me he appreciated people who quote realistic rates. He offerd me some business provided that I could actually come up with trucks for him. Worked out well..until he retired and they replaced him with a bean counter. Quoting high and not getting the business is bad enough.. quoting low and getting the business is much worse.
 
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Freight Broker said:
Reminds me of a shipper I spoke to years ago. I quoted him a fairly high price (because I really don't want low rate business I can't move) and he laughed and said that my rate was higher than the others, but as a former trucker, he told me he appreciated people who quote realistic rates. He offerd me some business provided that I could actually come up with trucks for him. Worked out well..until he retired and they replaced him with a bean counter. Quoting high and not getting the business is bad enough.. quoting low and getting the business is much worse.
Click to expand...


If you don't ask for high rates you'll never get them.....................
 
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Every quote we do we figure in round trips etc and we quote what we have to quote, like FB said a lot of times it better that you don't get the business.
 
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loaders said:
That's my rant on a rainy day, but my lingering fear, is that this process will continue to be successfully sold to upper management throughout our industry, as the ultimate cost saving exercise, with little or no attention paid to the level of service they will ultimately receive.
Click to expand...

In my humble opinion, if these sellers would leave the trucking industry alone and pickup a different industry, lets say time-share, they would make a ton more money. They seem to be able to talk circles around the purchaser and convince the purchaser to change without knowing what they are getting.
 
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Just a follow-up to my original post from last May. We were unable to retain any of the lanes we had, nor did we obtain any of the new lanes we quoted. We also received the standard "thank you for efforts and past service, but we are moving the business to other suppliers". As this customer had been with us for over 20 years, I had to find out more. When I asked the head of the traffic department if any of the successful bidders were not the lowest price, they basically said no, only the lowest price got the business. So in other words, the whole exercise was a "race to the bottom". Why they would have to hire an outside consulting firm to perform a job that could have been handled by a junior transportation clerk is beyond me. Also, why did they want to hear about our service levels, past experience, etc., etc. when the determining factor was strictly price? A very frustrating experience to say the least. Oh, by the way, we have heard rumblings from the shipping department that there have been screw ups and problems with the successful, "low rate" suppliers. We will have to wait and see how much of that they are willing to put up with.
 
Well, interestingly enough, we just received an emergency call from the shipper asking us to "save his ass" because the new provider can't get him a truck for a load and go today. Fortunately we had one of our regular carriers basically around the corner and were able to send him in. The shipper has told us that it has been a nightmare for them, calls from irate customers complaining about late deliveries, damaged shipments, etc. It is too bad that he has to bear the brunt of the displeased customers, and not the "head honchos" sitting down in the US offices. There just may be more to this story, as you have experienced Shakey.
 
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