Beyond Traditional RFPs: Understanding Mini-Bids

A successful shipping contract balances reliable services with cost-efficient rates. Shippers need trustworthy carriers to ensure on-time delivery and a positive customer experience, while carriers need to fill their truck’s or fleet’s finite carrying capacity at the best possible rates — and both shippers and carriers need each other to survive.

Rate negotiations are naturally susceptible to volatile swings throughout the year, which can make it difficult for these respective parties to gauge the long-term viability of a partnership. Beyond these natural fluctuations, there are also equipment shortages, seasonal surges in demand, shifting fuel prices, economic inflation and even adverse weather events affecting how shippers and logistics providers work together — that’s where a mini-bid comes in.

In this article we’ll cover all things mini-bids; what they are, how they differ from RFPs, when to use one and (most importantly) how a 3PL can help you maximize the mini-bid’s effectiveness within your supply chain.

What is a Mini-Bid, and How Does it Differ from an RFP?

As detailed in our guide to building a successful RFP (industry shorthand for “request for proposal”), an RFP is a formal process organizations frequently use to solicit proposals from potential service providers when seeking to purchase goods or services. The RFP functions as a helpful rubric for evaluating potential partners’ offerings and their ability to adequately render the services required.

A mini-bid refers to a request for pricing (RFP) on a set of specific lanes for a limited time (generally 3-6 months). While RFPs generally occur annually or quarterly (though market conditions and company needs can certainly cause exceptions), mini-bids are used to account for sudden shifts in the market due to unique challenges or circumstances. In effect, it is a small RFP broken down into clear cut, executable portions when the freight industry is in flux.

Mini-bids are most useful for determining costs pertinent to a specific area, for short-term supply chain needs like the busy holiday season or when shipping within a region impacted by sudden extreme weather or event.

Why You Might Choose a Mini-Bid

As with any type of contract used to manage freight capacity and budget, there are certain unique benefits to inserting mini-bids into your logistical operations — for starters, mini-bids optimize freight lanes by improving carrier selection, negotiating favorable rates and ensuring chosen carriers meet specific service and performance requirements.

Here are some additional perks mini-bids can bring to your business’ supply chain processes:

• Mini-bids may present more competitive rates. Mini bids can be used to negotiate more competitive market rates, especially if market conditions are favorable at the time of the bid. However, the duration of the rate is negotiable and varies depending on the specific contract terms.
• Mini-bids can quickly expand your carrier network. Mini-bids help shippers identify and quickly establish relationships with additional motor carriers — or carriers with specialized capabilities — for specific lanes or routes.
• The balance on a particular freight lane can be improved. Mini-bids can help shippers optimize their overall freight operations by balancing contract and spot market utilization for specific lanes. This can lead to cost savings and better resource allocation.
• Mini-bids highlight areas in need of your attention. Mini-bids allow shippers to focus on specific lanes or regions that may require special attention due to factors such as weather disruptions or seasonal variations in demand. This targeted approach can help address these challenges effectively.
• They are also inherently flexible. By using mini-bids instead of traditional RFPs, companies can account for sudden fluctuations in fuel prices, capacity constraints or shifts in demand. They also provide an opportunity to renegotiate rates and terms to better align with current market dynamics.

When Should I Use a Mini-Bid over an RFP?

A mini-bid is useful for a short-term project, a known promotional surge, or perhaps to bridge a service gap until the next scheduled RFP. Shippers will want to use mini-bids to align freight requirements when conditions in the market change. Here are a few examples of when utilizing a mini-bid makes sense:

• New origins are requested (if the destination was not in the original RFP).
• An increase in volume that outpaces the supply projected through the original RFP.
• High service failures that indicate it’s time to rework the original RFP.
• A change in the freight market specific to a shipper’s business.

In summary, a mini-bid should be used to address changes in pricing or a shipper’s needs without resorting to the even more unpredictable spot-rate market.

How Can a 3PL Help Manage My Mini-Bids?

Third-party logistics providers are experts at utilizing freight forecasting platforms, which in turn helps providers like ours at First Call Logistics manage high volumes of mini-bids. A great 3PL is built to manage the industry’s volatility through a combination of data analytics tools and years of hands-on experience in managing mini-bids and RFPs simultaneously.

Whether the contract is short-term or long-term, a 3PL is ready to handle the logistics needs of shippers who need to send their products nationally — or even across the border. Looking for assistance in the complicated business of managing mini-bids and RFPs? Contact First Call Logistics today to learn more about how our team can support your business.