Tender rejection is a very real problem for shippers with contracted loads. When a carrier rejects a load, the shipper then has to spend more time finding a carrier that will transport that load. The tender rejection rate, or the percentage of loads a shipper has rejected, can have a massive impact on your bottom line.
One way to keep your tender rejection rates low is by using transportation forecasting. This will help you determine what carriers are available before making a request. Another option is to diversify your carriers. That way, if one carrier rejects your load, you can quickly find other ones that can help you right away.
There are other ways you can lower your tender rejection rates besides these two solutions. We’ll discuss each solution that you can use to save your time and money.
Before getting into the solutions to tender rejection, it’s important to clarify what it is. The rate of tender rejection refers to the percentage of loads that carriers refuse to transport. When a shipper has a contracted load, they seek out a carrier who can transport it for them. Unfortunately, these contracted loads can be rejected by carriers for one reason or another.
When a contracted load has been refused, it’s sent to what’s called the spot market. The spot market displays spot rates, which are the real-time prices to ship a load on the spot. Rates for contracted loads on the spot market are often higher than they would be if they were accepted by a carrier beforehand.
Not only will spending money on a spot rate cost you more, but you’ll also have to account for other factors like fuel surcharges that could cause you to spend more to ship your freight.
As we briefly mentioned, carriers reject loads for a variety of reasons. In some instances, carriers have no choice but to refuse a load due to circumstances that they’re faced with on their end. Other times, carriers will reject loads due to mistakes made by shippers themselves.
Tenders are often rejected for these reasons:
Mistakes made on the request for proposal (RFP) that you send to a carrier can cause rejection. When it comes to filling out the RFP, you need to be sure that you fill it out correctly. Carriers need to know what they’re getting into before they accept the load.
Another mistake that many shippers make when they complete an RFP is that they tend to focus on rates, specifically low rates. Letting the carrier know what they’ll be paid is important, but so are other details about the shipment. This includes things like:
Many carriers plot out their routes for pickup and delivery. Others will call ahead before pickup to verify the address and determine if there are any hazards to trucks in the area. If a carrier discovers that a delivery or pickup location is not suitable for a truck to travel, they might decide to reject the shipment.
Some hazards that will cause carriers to reject a contract are:
Narrow streets aren’t great for truckers because it gives them little room to operate and turn their vehicles around. As for dirt roads, truckers that unload their own freight will struggle to move their pallet jack across this terrain. Lastly, low-hanging power lines and trees can scrape a truck and trailers, as well as obscure the view of the truck driver.
To avoid any problems that could arise from operating a truck in areas like these, carriers will reject these types of contracts in favor of easier ones.
A short lead time is something that causes many carriers to turn down freight shipments. Short lead times mean that carriers have to work harder to get shipments to their destination in the specified time frame.
Carriers want to avoid having a truck out on the road without a shipment. To avoid this problem, they often opt for shipments that have longer lead times. Carriers accept these types of loads more often because it helps them ensure that their truckers always have a shipment to move.
Even if you do everything right, there’s a chance that a carrier you’ve chosen will reject your load. This tends to happen when your carrier is at maximum capacity. Different carriers have different amounts of trucks in their fleet.
Essentially, it comes down to supply and demand. Some carriers simply don’t have the number of trucks to keep up with contracts that are coming in. This leaves them with no other option than to reject the tenders whose services they can’t fulfill.
A carrier can reject a contract simply because they’re not getting paid enough to cover their costs. Every carrier operates on a different budget. Therefore, what might be a good price for one carrier might not be the same for another. That said, if you notice that you’re constantly being denied by carriers, chances are you might be offering enough compensation to carriers to take on your contract.
Although there are many different reasons that your tender can be rejected, there are also numerous ways you can reduce your tender rejection rate. Preventing tender rejection will help you book loads faster, saving time and money.
The best way to write a great RFP is to be specific and provide details about your load. Carriers need accurate information to decide whether or not they want to take on responsibility for transporting a load. Provide details like whether or not live load and unload services are needed, driver assists that are used, and other details.
Detailed information about your freight is also necessary. A detailed RFP will help reduce the likelihood of your contracts being rejected by potential carriers. This includes information that we discussed earlier, such as pickup and delivery location.
One method that many tenders use to reduce their rejection rates is by investing in transportation forecasting. This type of technology is useful because it can give tenders the ability to predict what freight prices will be in the future.
Not only can transportation forecasting do this, but it can also help shippers determine what carrier capacity will be. With the aid of transportation forecasting, you can find the best times to book contracted loads. This will help you get ahead of your competition and dominate the supply chain.
As we discussed above, carriers reject loads that have hard-to-operate pickup and delivery locations. The best way to avoid this problem is by picking places that make it easier for the carrier to load and unload your freight.
This can mean meeting the carrier at a different location where they have room to operate their truck and load the freight into their trailer. Other options include providing the carrier with an alternate route to the pickup and delivery point.
Carriers tend to prefer contracts for lanes that are consistently used. The more consistent that a lane is, the more consistent the rates will be for it. Certain shipping lanes don’t have these features to them. Freight lanes that you should avoid are ones that only have freight traveling on them once a week or seasonal ones. Carriers are more likely to reject contracts for lanes like these.
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 for shipments. 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 below shows the average freight rates for dry van, reefer and flatbed shipping. Use these averages as a starting point for a good rate, then account for fuel prices.
|Trailer Type||Average Rates|
|Dry Van||$2.76 per mile|
|Reefer||$3.19 per mile|
|Flatbed||$3.14 per mile|
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