hand holding speech bubble with dollar sign - why freight spot quotes don't work for every business

Why Freight Spot Quotes Don’t Work for Every Business

Most freight providers have entire teams dedicated to providing spot quotes to shippers. Clients both new and old often require quick pricing on hot moves from origin to destination. Other times, the shipper will ask for pricing as an estimate. Spot quotes are an excellent way to get a general idea of the cost involved in shipping a product, but they won’t give you the best rates possible. By meeting with a 3PL provider, and discussing your freight, you’ll be able to secure better rates. One of the keys to an exceptional supply chain is early, extensive planning. Set pricing is a great way to fuel the design of a healthy supply chain. Freight spot quotes are a hard habit to break. Let’s look at some reasons why they won’t work for every business.

 

The Process of Freight Spot Quotes

magnifying glass on chart - spot quote process

First, let’s look at what happens when a spot quote is requested. The usual workflow looks something like this:

  1. The freight team receives a call, email or form submission
  2. The shipper and quotes department communicates back and forth to set the parameters for the move (pallet count, weight, dimensions)
  3. A rate is generated and sent to the prospective customer
  4. The shipper either uses the rate or moves the freight with another company

The process is simple, but it is limiting. Great 3PL partners can perform intricate planning of supply chains. Spot quoting removes the detailed precision a provider can execute. When possible, it is best to work closely with your partner to uncover a solution. By sharing data on volume and frequency, a provider will be able to see how your freight fits into their workload.

 

If you have a new lane opening up, or need some fresh pricing for your supply chain, schedule a free consultation with our experts

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The Many Reasons We Hear for Spot Quoting

little girl holding ear to hear - the many reasons we hear

Price Shopping

We get it; sometimes you want the lowest possible price. You might be trying to lower your overall transportation costs or have a one-time lane you need to fulfill. However, for the majority of Ocean Freight to Hawaii, it is best to secure long-term pricing through a trusted partner. Allow an expert team like Approved Freight to crunch the numbers and carve out a custom solution for you.

Just Getting an Idea

Our quotes team hears this frequently. A company will be starting a new project or planning for a future release of a product. Getting an asset-based 3PL involved early in the planning process will help ensure your freight moves at a better rate. But a great 3PL can provide much more value than a transportation rate. If you are working with a company like Approved, you’ll have access to a Project Management Center, filled with experts who know how to get the job done well.

New Lane

If a transportation provider knows your new lane will yield consistent volume, they are more likely to offer more aggressive rates. Instead of quoting a new lane, try asking for a call with the business development team of your partner. This meeting will help you negotiate rates that work for your budget. At the very least, let your 3PL partner know you have a new lane opening up. Passing this information along will help them plan better, which will result in better prices for you – the shipper.


Why The Spot Quote Approach Doesn’t Always Work

Expiration date

Most companies will set an expiration date on their spot quotes. Due to fluctuations in capacity, fuel, and fees, your rate from January probably won’t be valid in July. Make sure you fully understand the terms and conditions of the quote. Nothing puts a wrench into a supply chain quite like an unexpected rise in price. Unless you are planning on committing to a provider within a few days of your quote, you’ll want to inquire about long-term pricing. It is the best way to guarantee you receive the best rates every time.

Doesn’t cover the full scope of work

Many companies pump out rates – they aim for quantity rather than quality. Speed is an excellent approach for some moves. If it is an extremely hot shipment, a quick turnaround means your freight will embark for its destination in time to be delivered. However, for most ocean shipments, fast freight spot quotes aren’t necessary. Take your time with your provider to make sure the quote covers your full scope of work. You’ll avoid fees, auditing errors, and better planning.

 

Future Flaws

We see companies requesting quotes for the same moves over and over again. If you are consistently auctioning off the same freight to the lowest bidder, some companies may stop quoting you altogether. The spot quotes – no matter how quickly they are run – still require time and manpower. There is a bit of the “boy who cried wolf,” syndrome happening (that’s a thing right?) There is little incentive to give superb rates if there is no chance of winning. It becomes an exercise in futility for the quotes team.

Shippers are less likely to receive the best value. This may seem counterintuitive, but if a shipper is using spot quotes to move a large portion (or even one mode of shipments like ocean freight) the value will take a nose dive. Spot quotes aren’t detailed pricing proposals and rarely take anything outside of that one move into consideration. Therefore, the prices shipper’s receive won’t be the best they can get. Partnership and collaboration between a 3PL and a shipper is the best way to guarantee value.

 


How to Improve Freight Management

young woman smiling thumbs up with post it light bulb on forehead

In all instances, a consultation with a preferred partner is beneficial to shippers and providers. If a logistics provider knows how much volume is moving, it will be a more enticing piece of business. More permanent pricing and a signed agreement will help your partner better. When 3PLs and TSPs can prepare their loads, they’ll be able to maximize space on containers, which will equate to lower pricing for you – the shipper.

If you have a new lane opening up, or need some fresh pricing for your supply chain, schedule a free consultation with our experts

Schedule a Free Consultation