Resource Center/Article01/09/2024

LTL: To RFP Or Not to RFP

by: Jim Badovinac

Right now is as good a time as ever to send a strategically targeted RFP to LTL carriers, and Green Mountain can help you achieve success.

In January 2023, I penned an article stating that 2023 was going to be LTL RFP season, meaning that I thought it would be a good year to implement an LTL RFP strategy, because 2021 and 2022 saw tightened capacity, uncertainty and many other supply chain related priorities - most notably a huge focus on ecommerce and small parcel.
At the beginning of 2023, no one knew for sure what the year would look like. Certainly, no one knew the 4th largest carrier in the U.S. would close its doors at the beginning of the third quarter. There was a lot of uncertainty as to how the demise of Yellow Freight would impact shippers, other LTL carriers, and most definitely, the rates that those carriers would charge LTL shippers.
As a close to 35 years LTL industry veteran, I am going to be bold and tell you that right now is as good a time as ever to send a strategically targeted RFP to LTL carriers.
Yellow’s closing has had minimal impact on market capacity - equipment is plentiful, labor is adequate by all accounts, shipments, tonnage and revenue are down YOY, and while fuel is always a wildcard, it is once again negotiable. All of this leads us down a path to where it makes sense to test the market and to ensure that the pricing you’re receiving from your carriers is market appropriate.
The key to a successful LTL RFP is ensuring that you have the data carriers need to provide you with the most accurate and stable pricing. This is critically important to establishing long term, mutually beneficial relationships with your carriers. As a shipper, you should be constructing the RFP to determine everything you need to know about the carriers you’re sending it off to.
Here is a list of things we suggest:
  1. 1. Require a breakdown of each carrier’s technology capabilities (APIs, eBOLs, capital investment in upgrading technology, etc.).
  2. 2. Base Rates – be adamant in your required base and ensure carriers are willing to use and adjust/tier pricing to accommodate their own geo strategy.
  3. 3. If you have special handling needs, be clear about them and ensure the carrier can handle those needs.
  4. 4. Be clear about your liability needs and ensure they align with the carrier’s liability limits.
  5. 5. Know your cost for late deliveries, understand the real on-time percentage of the carrier and make sure that is covered in the RFP and/or the RFP response.
  6. 6. Ask carriers to clearly articulate their needs and strengths/weaknesses.
  7. 7. Equally as important as any of the above, be willing to explore dimensional based pricing and consider a move away from the antiquated class-based rating system.
So, why Green Mountain for LTL RFPs? First, we work with both the shipper and the carrier to get things right. We don’t negotiate rates, and we don’t re-sell rates. We facilitate data-based and needs-based shipper/carrier LTL partnerships. Yes, we look for savings for LTL shipper clients, but we don’t do it at the expense of a single carrier.
We believe now, the first quarter of 2024 is the right time for shippers to test the market in a very strategic manner and ensure you’re getting the best service at the best price for your supply chain.
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