Tender rejection rates can be a headache for your business. When carriers turn down freight, it throws off delivery schedules, drives up costs, and forces you to scramble for backup options. You’ll need a thorough understanding of tender rejection if you want to improve your acceptance rate.
Key takeaways:
Now, let’s jump into the details of tender rejection and learn how you can prevent it.
In the logistics industry, tender rejection occurs when a carrier declines a shipper's request to transport a load. This metric is often referred to as a tender rejection rate.
They’re calculated by dividing the number of rejected tenders by the total tenders offered, expressed as a percentage. A high tender rejection rate is a big problem. When carriers reject tenders, you’ll need to scramble for alternative options, typically at higher costs.
Tender rejection doesn’t just cause minor delays. It creates a serious problem for your business that can negatively impact your shipping operations. Let’s take a look at the potential repercussions.
Understanding these consequences should drive you to better manage your tender rejection rates and maintain the efficiency of your shipping operations.
Related: Dry Run Trucking
Carriers reject tenders for multiple reasons. Some are within a business’s control, while others stem from broader market conditions. Let’s take a look at the many causes of tender rejection.
One common issue that can lead to tender rejection are poorly structured or vague Requests for Proposal (RFPs). If an RFP lacks key details, carriers may reject tenders because they don’t fully understand the scope of the commitment.
Other problems that an unclear RFP can cause include:
Without precise specifications, carriers cannot accurately assess whether they have the resources and capacity to meet the requirements. This misalignment increases the likelihood of tender rejection, as carriers may be unwilling to commit to terms they cannot confidently fulfill.
Unclear RFPs can signal potential challenges in the project that make carriers wary of unforeseen complications. A higher risk perception can lead them to decline the tender in favor of more straightforward loads.
Carriers rely on detailed RFPs to evaluate costs, timelines, and resource allocation. Insufficient information prevents them from conducting thorough assessments.
While a poorly written RFP can hurt your acceptance rates, you should also ensure your other shipping documents are filled out correctly.
Freight rates fluctuate based on supply and demand. If market rates rise above the contract rates offered in an RFP, carriers may reject tenders in favor of higher-paying spot market opportunities.
Carriers also have limited capacity and aim to utilize it for the most profitable loads. If contracted rates are significantly lower than spot rates, they’ll likely prioritize spot market shipments. Therefore, you’ll experience more rejection when your shipments don’t offer competitive rates.
Related: How To Calculate Freight Shipping Costs
Carriers choose loads that are within their operational capabilities. If a shipment is too challenging for them to perform, they’ll likely reject it.
Pickup and delivery locations must be accessibleby carriers. Narrow roads or low hanging tree branches can make it difficult for a trucker to retrieve or drop off freight. The actual destination where the freight will be picked up or delivered will need enough room for a tractor and trailer to maneuver. Factors like these can result in tender rejection.
Carriers require time to plan their routes and allocate equipment. If tenders don’t give transportation providers enough lead time, they may have no choice but to reject the load. Keep in mind what short lead times mean for the carrier in terms of service abilities.
Because of these challenges, many carriers are inconvenienced by loads with short lead times and will avoid them altogether.
During peak seasons or high-demand periods, carriers may be at full capacity. Transportation providers aren’t going to book loads they don’t have the ability to transport.
When this happens, carriers will prioritize loads based on profitability, established relationships, and operational ease. If your business is not a preferred shipper, you’re likely to face higher rejection rates during these times.
Reducing tender rejections requires a strategic approach. Fortunately, there are a variety of strategies you can use to improve your acceptance rates
This includes:
Now, we’ll take a closer look at these steps and learn how to apply them in your business practices.
An effective RFP is one way to improve your acceptance rate with carriers. When crafting one, there are certain features you should include.
You’ll need to provide detailed information about your shipment. This will help carriers better understand what they’re transporting.
This includes:
You also want to communicate your service expectations clearly in your RFP. Providing key performance indicators (KPI) helps carriers better understand their responsibilities and perform to your satisfaction.
Prioritize high-impact lanes with predictable schedules and higher volumes for dedicated capacity arrangements. Exclude lanes with irregular volumes from your RFP.
Structure your RFP to align with carriers' existing networks. By clustering locations within specific regions or using key market areas (KMAs), you create more attractive bid opportunities, enhancing coverage and reducing the risk of tender rejections.
Another way to improve your tender approval rate is to increase your lead times. Giving carriers more time to plan and schedule loads increases acceptance rates. Instead of offering last-minute tenders, you should provide at least two to five days of lead time for carriers.
Providing enough lead time also saves you additional money that you’d have to pay for expedited shipping services.
Carriers prefer to pick up freight at locations that offer quick, hassle-free loading. There are a few easy methods you can use to make the loading experience better for truckers.
Making pickup easier for your transportation provider will help them remember you. This can lead to a more successful relationship.
Transportation forecasting involves using data analysis and predictive modeling to anticipate future transportation needs. The data it provides can help you in a variety of ways.
This includes:
Understanding market dynamics allows you to adjust your strategies accordingly. For instance, during tight markets with high spot rates, carriers may reject tenders in favor of more profitable opportunities. Being aware of these trends enables you to offer competitive rates and improve tender acceptance.
Forecasting also helps you identify optimal routes and schedules for your shipments. By leveraging this information to your advantage, you can organize loads that are more attractive to carriers.
Carriers need to make a profit on their operations and as a shipper, you need to make sure that you’re not paying too much on shipping costs. One way to account for this is by checking fuel prices. The price of fuel has a strong impact on the rates that carriers desire.
You can use current fuel prices to calculate a rate that will be attractive to carriers while also not hurting your wallet. To make the rate even more attractive, make sure that it’s clear in your contract that rates will be adjusted as fuel rates fluctuate.
The table we’ve provided shows how rates for dry van, reefer, and flatbed shipping have changed over the past four months.
As you can see, rates change gradually over time. If you’re shipping freight frequently, it’s good to check current rates to ensure your loads are competitively priced. Our article on dry van shipping rates will be able to give you further details on costs.
Working with a third-party logistics (3PL) provider gives businesses access to a broad network of carriers. A 3PL can help in a variety of areas, allowing shippers to:
By diversifying carriers with a 3PL network, you’ll reduce reliance on a single provider and increase flexibility during market fluctuations. Many 3PLs can also offer warehousing for goods as well.
Related: 3PL vs Freight Broker
USA Truckload Shipping has an extensive carrier network and years of experience in the logistics industry. We use a massive carrier network to provide transportation coverage all over the country. When you choose USA Truckload Shipping, you’ll gain access to a variety of services.
Don’t let tender rejections disrupt your business. USA Truckload Shipping is here to provide reliable freight solutions and expert logistics support. Fill out your Request for Proposal (RFP) today to secure dependable carrier capacity. If you have questions about our services, call us at (866) 353-7178 or visit our contact page to get in touch with our team.
R+L Global Logistics
315 NE 14th St., Ocala, FL 34470
