RFQ’s are perhaps the most widely used method when searching for a new freight forwarder. Shippers are pretty much only ever aware of their own shipping provider, and so when the time comes to find a new freight forwarder, all they can think to do is Google 50 freight forwarders, mark down their emails, and machine gun out an RFQ Excel document requesting rates.
There are instances in which an RFQ may be helpful, but most of the time, they are a recipe for disaster. They’re often way too vague for any forwarder to provide a genuine “out the door” cost for any shipping service or route, and any forwarder that wants a shot at the business opportunity is essentially forced to lie through their teeth about pricing in order to get the project.
Even aside from that, there are several other reasons RFQ’s are not a beneficial option with the current state of the shipping market. Here’s why:
Comparing Apples to Oranges
This is the root problem with RFQ’s – no one really knows what they’re quoting. You may think you put all the details there, but there’s rarely enough information in an RFQ for a freight forwarder to offer an accurate quote. Furthermore, part of the process of saving you money on shipments isn’t based on a simple dollar figure they give you for a shipment. Savings are found through working with a strategic partner that can help you decipher the best shipping processes by leveraging their expertise and network.
This is the central theme of 2020 and 2021 when it comes to international shipping. The market is completely unpredictable. While a freight forwarder may respond to your RFQ with a stellar number today, next week things will most likely be completely different.
Despite carrier contracts and connections, the market is simply too unpredictable right now to select a freight forwarder based on a promise for a rate. Right now, the most important thing to do is to find a forwarder that is well-informed on current events, and more importantly has a plan of action for how to deal with the unpredictability of the shipping market. And that requires a freight forwarder that has empowered employees to take action when needed.
Unfortunately, most freight forwarders have a vertical organizational structure that requires action items to be escalated to uninformed managers to deal with. Translation of actual issues is lost in escalation and shippers are left in the dark as they wait unacceptable time periods until it’s too late to address, which leads to the next point:
Due to the unpredictable nature of the shipping market, when issues arise, they need to be taken care of immediately. And no RFQ will tell you which freight forwards are able to act efficiently and effectively to address delays and other issues in the shipping process.
In order to figure out how time sensitive requests are handled, you need to start a conversation with a freight forwarder. Ask what their escalation process looks like, what projects and issues they’ve dealt with over the last year, how they’ve adjusted their processes, and what their current recommendations are for your unique situation.
Wrapping it Up
RFQ’s lack information that’s critical for actually determining how much your logistics process is going to cost you, and they most often attract inexperienced and ignorant freight forwarders that are only going to lowball for the sake of winning business despite their lack of understanding the scale of the project and the need for versatility in the process.
True cost savings come from working with a freight forwarder that can act as a strategic partner and bring value to your supply chain. The savings come in the conversations – how can your process be adjusted? What does the current market look like? What are available options and how might you forecast changes to adjust your approach next month?
If you’re dealing with frustrations with your current freight forwarder, or are daunted by the unpredictability of the market, it may be time to at least start a conversation with someone else. If you have questions you’d like answered, or just want to hear an alternate perspective, please don’t hesitate to reach out to one of our team members! We’d love the chance to help you and your team out.