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Which Comes First, RFP or Freight Service Agreement?

By Tamra Helton

On behalf of our clients, I often assist with annual Request for Proposals (RFPs) by mode (LTL, Truckload, & Intermodal) and this question always comes up. Is it advantageous to wait until the RFP process is completed to begin the discussion on a Freight Service Agreement (FSA), or discuss the Freight Service Agreement with potential carriers prior to the RFP being sent out?  Having observed both approaches over many years, I can recommend that the latter approach be taken.

Why?  Because when an annual RFP’s potential recipients are selected, it is common practice to select a mixture of carriers consisting of Incumbent Carriers and New Carriers.  So it is important to ensure that all carriers understand the shipper’s expectations and reach a sound agreement (FSA) that specifies potential legal ramifications if expectations are not met.

Here’s the right sequence to follow:

  • Have a meeting with each potential carrier and have an NDA signed

  • Discuss and get approval from all your potential Carriers on your FSA

  • Send RFP to carriers that can meet your expectations

  • Track carriers Intents to bid and those that Decline to bid

  • Track receipt of carriers Bids (response to the RFP)

  • Identify the Carrier with the best rates

  • Select the carriers rates to that you want to “Go Live” with

  • Notify carriers if with either a Bid Acceptance or Bid Declined Letter

  • Conclude the RFP process by sending the FSA to the Carrier, including as

  • Exhibits both the provider’s bid (their response to the RFP) (Rates, FSC Matrix, Accessorial Charges, etc.).

  • Upon signature by both the Shipper and Transportation Provider “Go Live” with rates

 

Shippers that take the other approach (RPF first, FSA later), run the possibility of selecting carriers that cannot meet their expectations, can causes budget analysis to be off, or spend more time looking for other carriers.  In short, the “FSA first” approach allows a Shipper to only consider rates from carriers that can meet their needs.  The result: man-hours saved, and a more efficient RFP process overall.

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