TenderTool – 10 Ocean Freight Tendering tips
Sea or Ocean carrier contracts are very complex. And getting the best results for your ocean freight tender is not self-evident. Therefore, we have gathered the 10 best tips to improve your ocean freight procurement.
It goes without saying that shippers, first and formally, must do their homework very well in order to negotiate successful ocean freight rates. The usual RFP Tender planning and preparation cycle is between eight and ten weeks. During this period it is vital to scout the ocean freight market for trends. Not just trends in rates, but also focus on volumes, capacity, mergers and any useful information you come across. Why? This might have an effect on your lanes!
Long story short, ask yourself and your organization the following questions:
– Am I aware of the latest industry developments? What is the market saying?
– What is the internal status of our ocean freight volumes and lanes?
– Are we likely to get better rates due to increased volumes, market shifts?
– Do we make a strategic shift in preferred carriers?
Ocean Freight market trends
Whereas in the past shippers were looking for long-term deals, nowadays it is very much the trend to tender short term ocean contracts (3-6 months). Ocean freight tendering is complex, and mostly, shippers are looking from origin port to destination port. Because of this nature, ocean freight tenders often contain many cost elements.
Besides, the changing in carrier alliances, consolidation, and the opening of the wider Panama Canal influences how shippers and 3PL’s are handling ocean freight procurement.
For shippers, it is very important to structurize their ocean freight tender process. One of the ways to do this is, is looking for the right freight tender solution. If you are looking for such solutions, focus on specific (end-to-end) transportation procurement software with powerful analysis and scenario capabilities. TenderTool tip: Look for providers using the latest software. The easier and intuitive the software, the quicker you get good results. This goes for your suppliers as well!
Ocean Freight Tendering: 10 ocean freight RFQ tips
1. Know what you need exactly for the lanes. Shippers must be able to understand how the cargo fits into a carriers service portfolio.
2. Know your suppliers. Make sure you have a full picture of the strengths and weaknesses of the suppliers you invite to the ocean tender
3. Kick-off with a meeting or webinar. Invite the most important suppliers, provide useful feedback to the carriers. You might be very familiar with your tender platform, but your suppliers might not be (yet).
4. Ensure, if anyone is quoting alternative rate structures, to make it crystal clear in their response. TenderTool Tip: By default, carriers and forwards are not allowed to change the rate structure. However, we have built a flexible menu where shippers can pre-define how suppliers quote. By working this way, shippers give their suppliers more flexibility but stay in full control at all times.
5. If you request a lump sum grouped charges by ‘Origin local charges’ for example. Ask your bidder to breakdown what is included in their offer.
6. Think about additional shipment information. You might not have done this in previous tender, but reconsider. Evaluate your bids for lead times, cut off times, transit times, demurrage and detention free-times and such.
7. Ocean freight tenders are not just about the pricing. When you benchmark your carriers, whether it is round one or two or further in the process, keep in mind the capacity factor. Mainly in peak season when shipping companies move significantly more cargo.
8. Get some help. Seriously. Ocean freight tenders are tough, time absorbing and moreover, a high detail game at high pressure. Get the right software in order to take away the high workload of the back of your team. You want people to focus on the important, not spending time on tender exercises that can be automated. TenderTool Tip: Look for a dedicated freight procurement software platform familiar to your supplier and moreover, easy to use! This will enhance timeliness, and the quality of the bids you receive. After all, it is all about collaboration nowadays!
9. Get the full impact overview. Especially large ocean tenders tend to have a large impact on organizations. Keep in mind to share the nominated ocean rates with the stakeholders in your organization. TenderTool tip: Look for freight procurement software with built-in impact scenario builders. This will give a full organizational overview and can you can break down the impact of the tender to the highest detail!
10. Benchmark your sea freight rates. This last detail might not have anything to do with the initial tender. But it can’t be stressed enough. First, decide a clear project timetable (3-6 months for example). Secondly, evaluate your rates to get better conditions, reduce the number of sea freight forwarders. Benchmarking allows you to gain insight and helps to decide the timing for a new RFQ process.
About TenderTool E-sourcing for Logistics
TenderTool is an easy to use freight tender platform. It incorporates deep logistics knowledge and the latest technologies. We deliver a smooth and efficient tender management experience to both shippers and carriers. TenderTool is suitable for large network tender small size tenders and simple freight rate benchmarks. TenderTool is used by many large multinationals, forwarders and consultancy organizations.
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