How will freight and transport tenders look like by the end of the new decade?
Welcome to the magic year 2027
In a study by Fraunhofer SCS the current and future situation of freight and transport tenders was examined. The topic was how freight and transport tenders will look like in the year 2027. To make a long story short the key results were outsourcing, platforms and the changing personal relation in the business.
We are doing the reality check in 2020 to see if the results are still relevant or if we have to do some minor or major adjustments to our strategy.
The key results of the study
Companies from industry and trade will outsource even more transports to logistics providers in the transport segments with the current moderate degree of outsourcing. This applies in particular to full load traffic. The transport volume of logistics providers will thus increase.
2. All in one central place:
Shipping companies will store their transport requirements and resources in one central platform which is accessible to all relevant stakeholders within the transport networks.
The status information of the service providers is also integrated into the platform. The IT system includes a function for freight and transport tenders. Its results can be transferred directly to the freight rate management, contract management and invoice auditing functions.
3. Personal relationship:
Logistics providers are selected according to clearly defined criteria. Large companies use tender platforms in order to guarantee the transparency of the awarding of contracts as specified by the company.
Are there still personal relationships? Even if platforms make it easier to work with freight rates and status information simplifies communication with stakeholders: the key to working together successfully with the logistics provider is personal contact from time to time.
The enormous growth of logistics
We cannot come to a clear evaluation without remembering why the logistics industry has grown so enormously in recent decades. First of all, the value-adding activities of procurement, production and distribution of goods are becoming more and more specialized due to the division of labor in many economic sectors. As the division of labor increases, so does the quantitative and qualitative demand for logistics services.
The globalization of economic activities is linking economic partners geographically in ever wider areas. Each country specializes in activities that it can do relatively best at the lowest price. Consequently, the demand for international logistics services is increasing.
Companies in industry and trade are outsourcing peripheral areas of their activities. Logistics service providers benefit considerably from the efforts of outsourcing.
Increased attention for freight and transport tenders
Freight and transport procurement in shipping companies has been receiving increasing attention for several years. And with good reason, because an average of 45 percent (in top times up to 60 percent) of logistics costs for companies from industry and trade are due to transport.
Freight and transport tenders are therefore an essential tool to reduce transport costs: Streamlining the logistics provider portfolio and improving transit times and services.
How many freight and transport tenders have you carried out in the past 5 years?
In the research literature the problem of freight tendering is considered in two ways. The predominant part of the literature focuses on an optimal information flow. The much smaller part of the literature is focused on reality and this is called Excel spreadsheets, pdf documents, data silos and a way of working that does not seem to have changed fundamentally since 1999.
How much workload (1 month = 20 working days) does your company incur for the entire tendering process?
In addition, freight and transport tenders are typically not seen as a core competence and are transferred to appropriately specialized service providers. This leads to the fact that the know-how on the subject is simply no longer available in the companies over the years.
Conclusion for freight and transport tenders in 2027
1. Outsourcing & platforms will still be the key driver!
2. The importance of personal relationship will decrease with the new generation which is taking over. They are digital natives who are used to Booking.com, Airbnb and LinkedIn anyway.
3. We would add one important strategic point: Regaining the competence of tendering back to the company. Transport knowledge as core competence.
SHIPSTA powers smart logistics procurement with a digital platform that connects shippers and carriers to ensure a frictionless procurement process for spot and contract buying, entirely online. It automates complex tasks, provides unrivalled visibility and supports fast data-driven decision-making. Designed and built by experts in logistics procurement, it is bringing transparency, automation and efficiency to the global logistics industry. It is used by some of the world’s largest companies to respond to market volatility, control freight costs and manage risk. The company was founded in 2015 and is based in Mertert, Luxembourg and Hamburg, Germany.