According to the American Trucking Associations (ATA), approximately 2 million for-hire carriers and private freight service providers are registered with the Federal Motor Carrier Safety Administration (FMCSA).
Due to the immense competition in the trucking industry, shippers must sieve through hundreds of carriers and learn about their service quality, prices, and routes, in order choosing the right one for their business. To streamline this activity, companies tender their loads to the open market.
Load tendering is when companies (typically shippers and consignees) ask carriers to provide a quote for transporting cargo to a specified destination, typically in large quantities. The process is designed to help shippers simplify, organize, streamline, and accelerate carrier evaluations to find a suitable carrier that matches their transport requirements.
In this article, we’ll explore what load tendering is and how it works in detail. We’ll also share the pros and cons of load tendering and some highly effective tips for maximizing the practice.
What Is Load Tendering?
Load or freight tendering revolves around the concept of inviting bids from different trucking companies to transport cargo according to the tenderees’ requirements. These parties are commonly shippers and receivers that have specific timeline, volume, and freight requirements.
The core purpose of load tendering is to enable shippers, brokers, or receivers to offer an opportunity for multiple carriers to bid for transporting their cargo and secure the best rates and services available for their budget and capacity.
Moreover, it enables manufacturers, retailers, and other types of shippers to share their long-term freight requirements with truckers beforehand so only the right carriers bid to move their shipments.
Load tendering also reduces the administrative workload for shippers, receivers, and brokers by streamlining the process and timeframe for evaluating trucking companies.
Shippers with a wide range of cargo transportation requirements can also set criteria for different goods (for example for machinery, chemicals, perishable items, and other types of cargo) so they can be transported with the right equipment and expertise.
Today, most large companies with high freight volumes use load tendering to move most of their cargo. In contrast, shippers with low shipment volumes or frequencies typically opt for load boards or digital freight matching platforms.
How Load Tendering Works
The load tendering process follows a sequence similar to most tendering processes that typically begin with a request submission (or tender) to multiple carriers. These tenders contain all the essential information, including the type of cargo, shipment dates and times, location, and total cargo weight.
Carriers can respond by either rejecting the load tender or sending a bid. The shipper or receiver can then choose the best carrier based on cost, schedule, quality of service, and other factors.
Once they accept the bid, the carrier is legally required to honor the price and freight commitment for the length of the contract, unless otherwise stated within the contract.
Below is an overview of the load tendering process:
- Invitation – The first step of a load tendering process involves sending invitations to carriers informing them about the details of the timeline, cargo, vehicle, handling, and submission requirements. In most cases, the tender document is private and confidential to the recipient.
- Clarifications – Once bids are sent out, interested carriers can engage with the shipper to learn more about the shipment’s scope. This stage can be done via physical discussions, a workshop, in writing, or via digital communication channels.
- Submission – Next, interested carriers can submit a bid with a price quote and other details, including company information, number of vehicles, and additional services before the tender deadline. Carriers are given a strict timeframe to respond with their most competitive bids.
- Evaluation – Once shippers receive bids from different carriers, they can evaluate the most suitable carriers that cater to their business requirements and carry out further negotiations.
- Award – Finally, shippers and receivers can award the freight contract to the carrier with the best bid. Larger carriers often bid competitively to be awarded contracts by multiple companies to benefit from more flexibility and reduce overall risk.
While we’ve shown a general process, take note that load tendering processes are not all the same and some shippers adopt a unique approach according to their requirements and the industry they operate in.
Advantages of Load Tendering
Load tendering offers several benefits for both shippers and carriers. We’ve outlined the most important ones below.
- Enables Batch Processing – Shippers or receivers may have different load types or timelines, and each variation may be classified as a different batch. Therefore, load tendering enables simplified batch processing by making the evaluation criteria more focused on the cargo and other types of requirements.
- Improves Productivity – By sending load tenders, shippers or receivers can shorten the overall carrier evaluation time and better streamline their administrative tasks. They can use the time saved to focus on other tasks and increase their overall productivity.
- Better Transparency – Load tendering is a bid-based process. Therefore, all decisions are made on merit, meaning each carrier is provided an equal opportunity to secure the shipper’s load if they meet the client’s freight specifications, including cargo type, volume, time frame, and other relevant factors.
- Increases Reach – When launching a load tender, shippers and receivers can increase their reach in the freight market by getting bids from multiple carriers. Some companies make use of load tender platforms where they are able to keep tabs on market rates, best practices, and emerging trends. It also allows them to reach a larger audience and helps to streamline the overall process.
Disadvantages of Load Tendering
Unfortunately, load tendering isn’t suitable for every shipper or receiver due to some disadvantages, that we’ll expand on below:
- Longer Turn-Around Time – Depending on the circumstances and market demand, load tendering can be time-consuming. It can easily take weeks or months before companies receive sufficient bids from carriers. Hence, it may not be ideal for shippers looking to move cargo urgently.
- Requires Preparation Work – Although load tendering can help shippers and receivers reduce their overall administrative workload, the initial tender preparation process and documentation can be tedious, especially for smaller companies with limited resources. Tenders require careful consideration and attention to detail to ensure carriers fully understand the shipment requirements.
- Promotes Short-Term Relationships – Load tenders are typically used for transporting shipments on a project basis. Therefore, a previously selected carrier may not qualify for future shipments since every freight project requires a new tender, which invites new bids. In other words, the chances of working with the same carrier and building long-term relationships become challenging since the selection process is merit-based and tenders are typically launched every 1 – 2 years.
5 Important Tips for Load Tendering
If you’re looking to use load tenders to find carriers, consider the following tips to reap the benefits of this approach.
1. Ensure Detailed Tender Scope
First, ensure your tender outlines all the necessary details. We have outlined a simple guide that you can use as a reference for your load tender template.
|The reference number to facilitate coordination with regard to the shipment.
|Location of cargo pick-up.
|Location of cargo delivery destination.
|Description of cargo including type, weight, size, quantities, etc.
|Timeline for transportation detailing when the cargo is required to be picked up and when the cargo should arrive at its final destination.
|Instructions for special handling requirements of cargo, if any.
|Contact information of the shipper, receiver, broker, and carrier, detailing the name of the key personnel for the project along with their phone number and email address.
|Payment terms to which all parties would be required to adhere to including rates, fees, and duration of payment.
|Any other information not detailed above; e.g. additional services, security details, dangerous good permit, certifications, etc.
The carriers that bid on your tender will only be required to meet the work requirements as per the tender. Therefore, you want to ensure you don’t miss out on anything to save time on revisions and minimize the risk of conflicts.
2. Establish Internal Timelines
Secondly, ensure you have planned an internal timeline for the entire tendering process, from initiation to submission, evaluation, and award. As mentioned earlier, receiving sufficient bids can take weeks or even months if poorly managed.
Therefore, being proactive and having the ability to plan ahead in this regard can prevent supply chain disruptions and capital losses.
3. Practice Transparent Communication
Thirdly, practicing transparent communication is crucial when leveraging load tenders to ship cargo. Shippers or receivers must be on the same page with their prospecting carriers regarding the work required to minimize or resolve any disputes early in the process.
4. Evaluate Based on Standardized Matrices
As a shipper or receiver, you should evaluate each carrier company using the same metrics to ensure fairness and transparency. To do this, you can define and share the metrics beforehand so carriers can bid accordingly.
Share your evaluations with unselected carriers to clarify any misunderstandings as you may not require their services at that moment. However, any of the carriers that did not meet your criteria during a tender could potentially be selected in the future.
Thus, maintain a healthy relationship to ensure they continue to bid on future tenders so that you’ll always be able to have a wide reach.
5. Use a Load Tendering Platform if Required
Finally, consider using a load tendering platform for wider reach and exposure. Most large companies use these platforms to tune in to market updates and invite bids from several carriers in their area.
Furthermore, these platforms allow you to keep track of market rates and you will also be able to use the information to find better pricing for your shipments.
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Co-Founder & Writer
About the Author
Andrew is a multi-business owner with over 12 years of experience in the fields of logistics, trucking, manufacturing, operations, training, and education.
Being the co-founder of freightcourse has given him the ability to pursue his desire to educate others on manufacturing and supply chain topics.