What is Contract Tendering?

Learn the essentials of contract tendering and management for transport with Chill-Chain's complete and easy guide.

We've simplified everything you need to know about transport contracts to help you understand and navigate the tendering process and management, so you can make the best choices for your business, including;

• What is a contracted load?

• Why do we use contracted loads?

• What is contract tendering?

• Where to tender your contracts?

• Contract management essentials.

• Contract duration, renewal or re-tendering.

• And what if my contracted haulier can’t cover the load? Or what if I need additional loads covered?

What is a contracted load?

A contracted load is a regular load. They are part of pre-established and formalised agreements between a shipper and a haulier.

Unlike spot loads, which are usually required at short notice, contracted loads involve consistent and ongoing commitment between the two parties. These agreements typically outline specific lanes, quantities, duration, rates and other terms.

Why do we use contracted loads?

1. Contract rates

Contracted lanes offer more stable pricing since rates are predetermined and often negotiated based on long-term partnerships and the shipper and the haulier both benefit from the guaranteed load.

Even if the demand for transport is at a peak, the contracted price will stay the same, as you have pre-booked the vehicle therefore the price is not determined so much by the peaks and falls in the market.

2. Planning and control

Contracted loads are especially beneficial for companies with regular transport needs, as they ensure dedicated capacity and a level of control over their logistics. Allowing shippers to secure consistent transport and hauliers to better plan their operations.

By entering into these agreements, both parties establish a mutual understanding that contributes to smoother operations and improved efficiency in the supply chain.

What is contract tendering? And where to tender your contracts?

Tendering is the process of inviting hauliers to bid on specific transport contracts.

First steps

Shippers will outline the requirements such as:

• Type of goods,

• Collection and delivery locations and times,

• Temperature the goods should be transported,

• Type of vehicle needed,

• Pallet quantity,

• Volume,

• Duration of the contract and,

• Any other specifications of the loads.

When tendering, it's important to provide clear and accurate information to receive accurate quotes.

Where to tender contracts

Tendering typically involves two primary approaches, the easiest method is through an online marketplace such as Chill-Chain. Upon submission, the tender is distributed to a network of suitable hauliers who, in our scenario, have undergone pre-vetting to ensure compliance.

Alternatively, you can directly contact transportation companies and request quotes. However, it's crucial to conduct the same assessments that online marketplaces would, encompassing factors like compliance, service level, reliability, and more.

Whichever you choose, hauliers will then submit bids outlining services, price and capabilities.

Which haulier to choose

Then it is time to award the contract to the winning haulier.

While cost is often a significant factor, remember to consider other aspects like haulier reputation, reliability, and service level as well as environmental considerations. Evaluating bids comprehensively ensures you choose a haulier that aligns with your needs and maintains a consistent and reliable partnership.

Contract management

The extent of contract management required on your part will be determined by the chosen approach, whether it's through an online marketplace or an in-house tendering process.

Contract management is streamlined when utilising a platform like Chill-Chain. It allows contracts to be fully automated, with the Chill-Chain team overseeing that loads run smoothly, eliminating the need for extensive manual oversight.

Additionally, the platform is designed to promptly alert any party if a matter needs their attention. This notification system eliminates the need for constant load checks and updates, as it promptly informs you of any developments. This enables quick resolution of issues and a seamless operational flow, without wasting time on continuous monitoring.

Other responsibilities of contract management are;

• Quality assurance - Ensuring the service meets the agreed-upon standard.

• Performance monitoring - Tracking and evaluating the performance of the contract to ensure that all parties are meeting their obligations.

• Risk management - Identifying potential risks and implementing strategies to mitigate them, such as developing contingency plans for potential disruptions.

• Conflict resolution - Addressing any disputes or conflicts that may arise between parties involved in the contract.

• Change management - Handling any modifications or adjustments needed in the contract terms due to evolving circumstances.

• Reporting and documentation - Keeping accurate records of interactions, changes, and developments related to the contract.

• Payment processing - Managing payment schedules, invoices, and ensuring that financial aspects of the contract are properly executed.

• Compliance checks - Ensuring that the contract and its execution adhere to all relevant laws, regulations, and industry standards.

• Relationship management - Cultivating and maintaining positive relationships with suppliers or partners involved in the contract.

• Performance review - Conducting periodic evaluations to assess the overall success of the contract and identify areas for improvement.

• Data security - Safeguarding any sensitive or confidential information exchanged during the contract period.

If you choose to manage the tender process independently, it's important to take these factors into account, as many of these tasks would typically be handled by the marketplace/platform if you were using one.

Contract duration, renewal or re-tendering

Contract durations are influenced by industry trends and business strategies, as well as the contracts the suppliers themselves hold with their customers.

The duration of the contract should be disclosed in the initial outline of requirements. There will also be an agreed-upon notice period, should one of the parties wish to end the contract prematurely.

Renewal decisions hinge on performance, competitiveness, and evolving business needs.

Re-tendering may be necessary to explore new options, maintain a competitive edge, and adapt to changing market dynamics.

What if my contracted haulier can’t cover the load? Or what if I need additional loads covered?

In the event that the contracted haulier is unable to accommodate the load or extra loads needed, you will be able to utilise a spot market for a one-off load. This may come at a higher cost, depending on many factors such as locations, notice time, load type etc.

Utilising an online marketplace provides access directly to a spot market with an extensive network of pre-vetted hauliers. Marketplaces can offer solutions for an array of different load specifications, ensuring that transportation needs can be met promptly.

You might also experience cost savings since there's a higher likelihood that the load could be matched with someone who requires a backload, leading to more efficient resource utilisation.

What is a Spot Load?
A Complete and Simple Guide to Spot Loads and Spot Shipping.