With spot rates below the long-term prices, declining port congestion and surplus cargo capacity, shippers are sitting in the driver’s seat position this tender season.
Some companies have decided to postpone their tenders to keep playing with spot rates. But going to market without locked capacity for the sake of getting lower prices is a risk not all shippers are willing to take.
If logistics managers want to ensure better stability for the upcoming future, their top priority must be to secure capacity with competitive contracts for next year.
So how can you get strong long-term contracts for 2023? Here are 3 smart ways you can gain a competitive advantage this tender season:
1. Benchmark your current and historical freight rates
Freight rate data is one of the most valuable resources for logistics teams – especially when negotiating with suppliers. So, if you want to negotiate your contracts from a strong position, having an actionable database of your transportation costs is essential.
But transparency into current and historical rate data is often challenging when you're running a global freight procurement strategy involving countless suppliers and lanes.
Leading shippers are now using digital rate engine tools to centrally store all their rates in the cloud. This unique technology makes it easy to:
- Build a live database of freight rates across all modes of transport globally.
- Obtain powerful insights into your own freight data.
- Negotiate strategically with your carriers based on historical and market figures.
By ensuring accurate visibility into freight rates, global teams are leveraging this tender season to renegotiate their contracts and benefit from the spot market slump and the slight drop in long-term contracts.
2. Streamline your tenders with a freight-specific procurement technology
Managing freight procurement while dealing with transportation complexity is not an easy task. When you’re dealing with hundreds of lanes, destinations and global regulations, it’s hard to collect all this critical information to successfully submit RfQs.
Teams are simply not prepared to handle the complexity of transport tenders with generic procurement platforms or Excel spreadsheets. So they are increasingly relying on specialized platforms to digitize the strategic area of freight negotiation and procurement.
Using freight procurement technology enables you to deal with complexity while executing effective tenders. For example, here are some of the benefits from which enterprises are gaining a competitive advantage and wouldn't get with a generic option:
- Reducing the freight tendering process from hours to just minutes.
- Using ready-to-go industry templates to standardize and streamline requests.
- Adding specific data such as performance, capacity or surcharges to run complex RfQs.
- Automating scenario building to always tender at the right moment based on own criteria.
Fortune 500 companies are now using digital RfQ tools to automate up to 90% of their tender process to better focus on strategic areas and react faster to market fluctuations.
3. Create stronger relationships with your freight carriers
Even now that the winds are blowing in the shippers' favor, building a solid relationship with your carriers is critical to negotiating on the best terms and securing capacity.
After the last few years, marked by shortages and disruptions, there’s no guarantee that we won’t get back to a similar scenario. After all, interruptions are, by nature, unexpected. And annual contracts are not disruption-proof.
So now that shippers are on the rise and carriers must compete to fill their capacity, it’s your opportunity to build stronger partnerships with your suppliers in order to secure better terms and priority during the year.
“The next few months will also be exciting for shipper-carrier relationships as carriers currently have the potential to repair some of the damage from the past years”, noted Xeneta.
How can you build a strong relationship with your carriers? As with any relationship, effective and seamless communication is essential. Logistics software with real-time messaging tools allows you to communicate smoothly with your carriers, ensure they can contact you directly anytime, and ultimately streamline negotiations.
If you use carrier-friendly procurement tools, you'll get your suppliers to love working with you, while ensuring profitable contracts and greater security for your shipments in the future.
Will your team be ready to apply all these strategies for this tender season? Those logistics teams with the right log-tech resources will be the ones to gain a competitive advantage in the current market.
Leading shippers are easily covering these strategic areas by working with SHIPSTA. Book your special free consultation with our logistics experts to discover how you can leverage this tender season at its best.