Logistics is the overall process of managing how goods, services, and information are acquired, stored, and transported to their final destination. Because transporting freight to its final destination requires a shipper to find available capacity with a carrier, load tendering is a vital piece of the logistics equation.
What is Load Tendering?
Simply put, load tenders allow a shipper or broker to offer cargo to multiple carriers in order to secure the best rates available. The shipper may be a manufacturer, a retailer, a 3PL, or anyone else wanting to transport goods. The carrier is an individual or company that specializes in transporting cargo (also called freight) from one place to another.
The process begins when a shipper submits a request, or tender, to one or more carriers. Load tenders include essential information, such as a detailed description of the items being shipped, the dates and times for the cargo to be picked up and delivered, the addresses for pickup and delivery, and an estimate of total cargo weight. Carriers may reject the load tender request, but interested carriers respond with a bid. The shipper then chooses the best bids based on cost, schedule, etc. When a bid is accepted, the carrier must honor the price and the volume commitment for the length of the contract.
Load tendering is important in logistics because it helps shippers to control costs and to assure contract compliance. In addition, load tenders can prevent confusion if any claims have to be settled regarding lost or damaged goods.
Load Tendering Best Practices
The supply chain challenges of the last two years have demonstrated why the use of best practices is imperative at every step of the logistics process. Tender rejection can lead to lengthy shipment delays, extra expense, and logistics nightmares. Here are some key principles to keep in mind when load tendering:
Give Carriers as Much Lead Time as Possible
Lead time is one of the main factors influencing the pricing of a shipment. A study conducted at MIT found that “the more time a carrier has between the tender and pickup day the more likely the first carriers in the routing guide are to accept the load.” The first carriers in the routing guide are usually “first” because they have the best prices and services and are, therefore, more desirable choices.
The MIT study suggests that “increasing average lead time to five or more days will markedly reduce transportation costs.” While that lead time may not be feasible for all shipments, most experts agree that a lead time of 24 to 72 hours is crucial for tender acceptance. Additionally, some carriers offer lower rates with more lead time.
Be Flexible on Shipping Times
The time of week a shipper tenders can also impact acceptance and cost. According to the previously mentioned MIT study, tendering at the end of the week is more expensive than mid-week, which has the lowest cost. Weekend tenders and pickups are the most expensive, with some carriers tacking on additional fees for weekend activity.
Besides shipping mid-week whenever possible, shippers can cut costs and increase the chances of tender acceptance by adding flexibility to their shipping windows. For instance, a shipper might offer a three-hour pickup window rather than a set time. Carriers often refuse a tender if the time frame is too tight or doesn’t mesh with their schedule, but a little flexibility in the shipping timeline may allow the carrier to accept the tender.
Provide Accurate Shipment Details
Leaving out even one essential shipment detail can lead to a tender rejection. Shippers must describe the type of commodity, including its weight, height, length, and width. Does the shipment require a special endorsement (such as hazmat) or a certain type of trailer (such as temperature-controlled)? All of those factors must be considered by the carrier. When the tender provides all the necessary information, carriers will know right away if they can accommodate the shipper’s needs and, if so, they can give an accurate quote.
Use a Transportation Management System (TMS)
One of the best ways a shipper can facilitate load tendering is to use a transportation management system or TMS. As supply chain management has become increasingly complex, transportation management software has allowed load tendering to become more precise. At Nexterus, our TMS Fusion Center allows shippers to save money because it quickly considers all available shipping options and allows shippers to make the best decisions quickly.
Let an Expert Help
Since 1946 Nexterus has been providing supply chain management services. We have long-term partnerships with reliable transportation providers so we can find a cost-effective solution to all your shipping needs. Our proprietary best-in-class transportation management software eliminates the need for manual processes and delivers customized reports. Contact us to learn more about Fusion Center and how Nexterus can help your business succeed.