How to Bid on Freight Contracts

We get it—freight bids are stressful. You go through a lot of effort to obtain requests for proposals and write the bids. Then, you have to wait to see if you’re chosen. It’s disappointing if you don’t win a bid, but here’s a light at the end of the tunnel: lots of companies need to ship their products. So if you aren’t chosen, there are always other contract opportunities—meaning another chance to win a bid. To do that, your bid needs to be competitive and present an enticing value proposition for your potential customer. Increase the chances of winning future bids on freight contracts by knowing what type of bid you need to make, when you should make the bid, and what you need to include to blow your competition away.

Types of freight bids

You’ll create different types of bids depending on what the customer wants and needs from you. They may have a request for proposal (RFP) out looking for procurement of a long-term contract or for a carrier to help them out with some extra product that needs to go out as soon as possible.

Annual contracts

Annual contracts between a carrier and a shipper are long-term agreements negotiated around a projected amount of volume and other shipping requirements. As the carrier, you’ll agree to charge a certain rate for the entire contract, regardless of any potential market fluctuations. Typically, companies that pay contract rates will have access to your trucks on a first-come, first-served basis. If they don’t fill your trucks with their shipment, then you still have room to add in smaller shipments to maximize your profits.

Mini bidding

A freight mini bid is a simplified RFP that shippers will send out when there’s a change in the market to try and get more competitive rates. They usually last anywhere from three to six months. Think of them as an addition to an existing contract that modifies the terms—and can compete with lower spot rates when freight rates fall. For example, send a customer a bid that includes extra value, like increased flexibility on shipping windows or priority on open trucks if they agree to a different rate for that period of time.

Spot rates

Spot rates are short-term bids made to move goods for a shipper on a single occasion for a fixed rate. These bids are based on current market conditions and your capacity. Unlike the fixed rate in an annual contract, spot rates change constantly based on the freight lane, as well as current supply and demand. Shippers will often ask for a spot rate if they need to send something outside of their contracted volume or if they’re sending a smaller shipment. Spot rates are a great way to find backhaul to avoid empty miles. If you want more revenue from smaller shipments, use shared truckloads to combine multiple shippers’ freight onto a single, multi-stop truck—bringing in up to 20% more per haul.

How do freight bids work?

The freight bidding process starts when a carrier receives an RFP from a shipper. That RFP offers terms that the shipper is looking for, and the carrier chooses whether they move forward with the bid or if they reject the shipper’s terms. Usually, annual contract proposals go out toward the end of the fiscal year when contracts are ending, and companies are looking at their finances. When you create your bid, you’ll want to look at things like:

• Current market conditions: Gather information on shipping rates, carriers, and freight classifications. A site like DAT gives you real-time information on spot rate changes by week, month, and year as well as any changes in fuel costs. Flock Freight’s newsletter also provides great insights on the current state of the supply chain.
• Layout of the routes: Identify the origin and destination of the shipment and any potential stops or layovers along the way. This allows you to plan for estimated fuel costs and any wear and tear on your trucks so that you can present a rate that helps cover those expenses.
• Weight and size of shipments: Look at the size and weight of the shipment to ensure the accuracy of your bid. If you make a bid and then find later that the shipment won’t fit on the truck, or it’s too heavy, then it will be tough for you to work within the limits of your contract.

Once you have that information in hand, you can create a bid to send out to shippers. Include your shipping process, the destinations you can deliver to, terms and conditions, pricing, and information about next steps after they sign with you.

How to make a competitive bid

You won’t be the only one making bids to shippers—they’ll send their RFPs out to several carriers in search of the best rate. To stand out from the crowd and be competitive, you’ll need to present a bid that has reasonable fees and shows your potential customers your first-class value proposition.

Know your market and competition

You should already know the current market conditions before you create your bid. Research the current market rates, examine industry standards, and look at any competitor bid strategies you can get your hands on. If your fees are too high compared to your competitors, shippers may not choose your bid. While you want your fee to be competitive, take into account other cost considerations like labor, fuel, and how much you need to charge to make a profit.

Know your value

In your bid, highlight your company’s unique business value. Talk about your industry experience and focus on the number of years your company has been in business. Do you offer any white glove services or have any freight specialties? You can also highlight any state-of-the-art technology you use that streamlines the shipping process.Let your clients do some of the talking. Include client testimonials in your freight bid that show how you’ve helped them over the years so potential customers can see how you’ve made a difference for other small businesses or larger clients.

Where to find freight contracts for bid

If you’re not sure where to find freight contracts to bid on, there are a few ways you can work to build your network. Cultivate strong, ongoing relationships with shippers so that you end up on their short list for RFPs. Attend trade shows or conferences, like the American Supply Chain Summit or the Association for Supply Chain Management’s annual Connect conference so you can network and find shippers in person. Also, form partnerships with third-party logistics (3PL) providers who manage freight contracts. You can find them at trade shows, or research your best options online. Read online reviews from both shippers and carriers to see how customers feel about each 3PL provider before partnering with them. You can also bid on government contracts. These exist at the federal, state, and local government levels and can be a good option for you. The U.S. General Services Administration lists some opportunities, as well as sam.gov. If you do want to take on government contracts, just know the approval process can take a while. Look into working with freight brokers to locate spot rates outside of your contract, or use logistics technology like load boards (such as Flock Freight) to find additional opportunities.

Why Flock is better than a contract

Sometimes, your contract volume will slip—and when that happens, you might need to earn more spot bids to make up for the deficit. Flock Freight provides you with high-paying shared truckloads that will drive up your profit, in many cases up to 20% per haul. Contact us today to learn more about partnering with Flock Freight and how our proprietary technology can save you time and bring you more customers.