As the global economy expands, there are currently varying levels of sophistication regarding U.S. companies’ abilities to navigate international shipping. Utilizing brokers, 3PL’s, 4PL’s, etc. have been a generally-accepted practice for many international shippers for years. Due to the advent of RateLinx technology, shippers now have the ability to develop their own international shipping program directly with carriers.
Managing an RFQ is generally a very time-consuming and tedious task for companies that “go it alone.” Contacting carriers, structuring the RFQ itself, obtaining bids, reviewing bids, and quantifying the results can be an overwhelming task that can take months to endure. And, once completed, it is very important to determine if the bids that were received in this process are at or below market level pricing for a company with similar freight volume – that determines the success of a company’s bid process. This is the inherent problem – how does one know?
Until recently, companies had two choices: They either 1) performed the RFQ process themselves; or 2) utilized a Third-Party Logistics Company (3PL) to manage the RFQ process.
In #1 above, managing the RFQ process internally is extremely time-consuming, and in the end, the company is limited by their own market knowledge. It is difficult to measure the success of the bid before the program is actually implemented.
In #2 above, using a 3PL will greatly reduce the time consuming process – and will leverage market knowledge of the 3PL, but the problem exists of not truly knowing why the particular carriers were chosen – was it to meet the needs of the shipper, or the 3PL? Also, the problem of not fully knowing the actual true market level pricing exists as well.
Utilizing the RateLinx Solution:
Benefit 1 – ANALYSIS – As with anything, it is difficult to establish direction to one’s destination without knowing where one is actually starting. Establishing the starting point is precisely what a RateLinx Analysis does, and is the first step to determining the direction. By having RateLinx input historical shipping information and data, one’s overseas freight characteristics are accurately captured in the RateLinx Analysis, the results of which are important to move to the next step – the Strategy.
Benefit 2 – STRATEGY – The Strategy is based on the freight characteristics determined in the above Analysis, through the use of RateLinx’ Normalization process. It is extremely difficult to compare different rate bases due to the inherent biases that each carrier applies to their own rates. These biases, both for the shipper and against the shipper, are then used to determine which carriers are the best fit to haul the shipper’s freight. Once these biases are removed through the statistical normalization process, RateLinx is able to rank the carriers based on which carriers will provide the pricing that is at or below market discount levels – it is very clear.
Benefit 3 – EXECUTION — Execution is actually obtaining and securing the market level pricing from the carriers that were determined by RateLinx’ Normalization Engine as the best fit(s) for the shipper’s freight. This entails facilitating and obtaining the necessary tariffs, contracts, etc.– between the shipper and the carrier – in order to move onto the next step in the RateLinx process. Nothing is finalized with the carriers until the Quantification process occurs below.
Benefit 4 – QUANTIFICATION — The most important mechanism in the RateLinx Solution – determines and re-affirms that the pricing obtained is where it needs to be in relation to current market levels. The proposed pricing is entered and modeled against the historical shipment data to determine what the shipper’s actual final freight cost would be, and the final carrier mix is also distinguished and re-affirmed.
IMPLEMENTATION – The final carrier pricing, rules, terms, etc. are then entered into the shipper’s RateLinx Solution (ShipLinx) which enables the shipper to comply with the most optimal freight decision on a transaction by transaction basis – from any and all of the shipper’s shipping locations, thus ensuring that the shipper enjoys maximum benefit derived from the RateLinx process.
