BY MARK B. SOLOMON, SENIOR EDITOR
NATIONAL MOTOR FREIGHT
transportationreport
Go
short!
Study says annual rebidding
of truckload contracts will
save shippers money over
multiyear agreements.
SINCE THE RECESSION HIT, TRUCKLOAD
For the carriers, the reasoning was simple. With their costs rapidly escalating, they
wanted the flexibility to change rates and
contract terms on short notice and not be
saddled with static multiyear pricing that
lagged behind their dynamic expense
structures.
But short-term contracts might not just
benefit the carriers. In what may be the
most extensive study ever conducted into
contract bidding behavior in the truckload
sector, researchers at Iowa State University
found that shippers who rebid their freight on an
annual basis could save significant money—in the
millions of dollars a year in some cases.
The three-year study, commissioned by third-party logistics services and brokerage giant
What’s more, because the researchers found that the
savings generated at the initial stage of the rebid diminished within a year, a strategy of annual rebids allowed
those savings to be freshened every year.
All told, shippers were able to save, on average, $40.44
per load through what the study called “annual bid pro-
curement events.” Given that the average contract rate for
an individual load in the study was $907, yearly rebids
helped shippers cut their contract pricing by about 4. 4
percent, which the researchers called a “sizable gain.”
A large shipper tendering 100,000 loads a year could
save about $2.5 million through annual rebids, according
to estimates by the survey’s authors. Although it costs
more to rebid contracts annually instead of on a multiyear
basis, the rate savings—even for smaller shippers—usual-
ly outweigh the expenses, according to the authors.
The study analyzed data from 700,000 truckload shipments that were accepted by carriers from 2008 through
2010. The shipments were tendered by TMC, a division of
