How companies can effectively conduct freight tenders or transport tenders

The process described does not have to be carried out in an exact form. Shippers omit some of these steps, combine them, or adapt them to their internal processes.

This step involves obtaining information about the logistics service provider in written form. They then have the opportunity to present their company, including its working methods, processes, company network, sales and business figures. This also includes information such as payment terms and assumption of liability. This serves to qualify logistics service providers and build up a pool of logistics partners who can be included in the later rounds of the freight tender. Logistics service providers who are not considered due to their company structure are eliminated at this point.

Logistics service providers are asked to explain their logistics concept. This involves describing the logistics processes and procedures in more detail. Which pre-carriage, main carriage and on-carriage modes of transport are used, how are shipments reloaded and packaged, how are transports secured and insured, which carriers and airlines are used, etc. From this, shippers can deduce which strengths and weaknesses logistics service providers have and how they can be used in their own transport processing.

In order for logistics service providers to be able to submit complete freight offers, they must receive certain information. To do this, shippers must download, prepare and consolidate their shipping data from transport management systems (TMS) or enterprise resource planning systems (ERP). In addition, shippers must determine which routes or trade lanes they want to query, which cost points should be offered, and which calculation bases (e.g. per shipment, container, TEU, B/L, AWB, customs clearance, weight, volume ratio for different modes of transport and routes). This also includes a detailed list of the shipment structure with the number of shipments, dangerous goods class, security status, Incoterms (International Commercial Terms) and information on stackability. All of these parameters and information should be defined as precisely as possible in an offer structure so that logistics service providers can submit complete offers, there are no queries or increased communication effort, and the offers submitted are actually comparable. Otherwise, it is neither possible for the service providers to submit correct freight offers, nor can these be adequately analyzed and compared by the shipper.

The documents are then sent to the pre-selected, qualified logistics service providers or deposited in the tender portals, tender portals and tender platforms.

For many freight tenders and tender platforms, logistics service providers must first register. There they will find all tender documents including Excel sheets, Excel offer templates, Excel or offer matrices. Here, logistics service providers can view all offer-relevant data and specifications, fill out, edit, check and submit the offer tables.

The freight offers submitted by the logistics service providers can be analyzed and compared after the first offer has been submitted using various dashboards, standard reports and reports. For an even more individual analysis of the offer data, these can be exported to Excel. What makes the numerical analysis more difficult is price information that was submitted as text. Individual cost items such as demurrage, detention, storage fee-free time, demurrage, diesel and fuel floaters or even exchange rate conversions can differ considerably. Even if these costs may not be incurred as standard for transport, they should be taken into account when awarding the transport contract or selecting the logistics partner.

After the qualitative assessment of the transport service and the performance of the logistics service providers has been carried out and the freight rates and freight conditions have been compared, the freight tender process begins. Individual discussions are held with the logistics service providers. Individual aspects of the logistics concept can be changed and cost components renegotiated. This can also take place in several rounds or in the form of transport auctions. Finally, shippers decide under which conditions and for which periods they want to work with certain logistics service providers. For this purpose, transport contracts are drawn up and awards are made.

In general, all tender data from logistics providers is archived and can be viewed by shippers at any time. The agreed conditions are usually stored in various IT systems of the shipper using further Excel processing steps, so that the conditions are available for product calculation, freight auditing, freight control and billing control. This ensures transparency and audit security.

A freight tender is therefore very complex, even in its individual steps, and requires a high level of transport and forwarding knowledge. You also have to know your IT systems very well and be able to operate them. Data handling and data preparation also require appropriate knowledge. Overall, it is a very complex process that many shippers underestimate. They only carry it out once a year or every two years, if at all.

Even if shippers conduct freight tenders via e-sourcing, e-procurement, online auction tools or other freight platforms, they must expect a high level of preparation and communication effort. The tendering process is also very time-consuming for logistics service providers. They have to register with various portals and familiarize themselves with the tools. Registration and user management in particular are very disadvantageous for them.

Many services are not particularly user-friendly. It is also noticeable that there is often a large amount of data that is not of any real use. There are many reports and dashboards that pretend to be transparent about prices, but from which it is difficult to derive concrete recommendations for action. A benchmark against the general market is also rarely useful for shippers, as they must concentrate on using their own purchasing power in the market as cleverly as possible.

In general, many tendering platforms and tendering consultancies offer a relatively low cost-benefit ratio.