We get requests to partake in a handful of RFQ bids throughout the year, and we completely understand the intent behind them. Your business wants to do a cost analysis on various freight forwarders to figure out whether you are getting the best deal.
The issue is – RFQs leave out so many crucial details needed in the vendor selection process. So many, in fact, that the lowest-cost vendor on an RFQ may end up costing you the most in the shipping process. Here’s why:
Are RFQ Bids Accurate?
RFQs are a quick and easy way to get cost estimates from multiple shipping vendors in one go. You machine-gun the same RFQ excel template to 50 forwarders, wait for their response, filter out everyone who’s not in the top 5 and take it from there.
But do you really know what you’re looking at? Did all the freight forwarders who issued you a quote know what they were looking at?
One of the largest problems with RFQs is the classic ‘Apples and Oranges’ phenomenon. Depending on shipping mode, transit time needed, frequency of shipping, type of product, incoterms, certifications (such as Known Shipper Status), and many other factors, your rates may fluctuate greatly! So much so that it might render the entire RFQ useless.
So, in short, no – RFQs don’t provide an accurate estimate of actual shipping costs.
Why RFQs Give You Bad Recommendations
Unfortunately, RFQs barely scratch the surface on all necessary details to issue an accurate quote. What ends up happening is all the low-quality service providers immediately quote you on the cheapest possible solution by making every cost-advantaged assumption about your business that they can just to get into consideration.
You end up booking with them since they made it into your top 5 and you immediately realize you both were comparing Apples and Oranges. They quoted for one incoterm, you needed another. They quoted for the lowest cost carrier, but you need security. They didn’t discuss cargo insurance with you, but you need it for your product. They didn’t discuss routes and transit time, but you have time restraints and requirements.
You get the picture.
Vendor Selection Process: How to Properly Search for a New Freight Forwarder
We understand the convenience of RFQs, but hopefully by now you realize why they can’t be trusted. They only give you information on a few metrics but leave out the greater majority of important details.
The vendor selection process should be about relationship, expertise, and proposed solutions – not a price tag.
Our biggest tip is: Have a conversation! You need to talk with your potential freight forwarder over the phone or in person. A vendor hiding behind an excel sheet doesn’t tell you anything about their capabilities or out-of-the-box thinking and solutions.
Interlog USA: How We Help
We dislike RFQs primarily because our “bread-and-butter” is in providing critical thinking to devise unique solutions for potential clients. Where we shine is in analyzing your current supply chain – frequency of shipments, mode of shipping, product, route, origin and destination, etc. – and seeing if we can save you time or money through certain service offerings.
Often times, buyer or supplier consolidation, rail transport, known shipper air cargo, routing changes, and many other unique solutions can help improve your current logistics process. But none of that comes through an RFQ. It all starts with a conversation.
If you are still looking for a new freight forwarder, an RFQ probably won’t present the best vendor for you. You want to have a legitimate conversation with them over the phone or in-person. A freight forwarder brings real value through their industry expertise, unique solutions, and customer service – not through offering their lowest cost, lowest quality number to you on an excel sheet.
If you are currently going through the RFQ process or are planning on doing so soon, please reach out to one of our team members to talk with us about the vendor selection process. We have tons of recommendations on what factors to look for and how you should begin your search!