Tender Season Sets Sail for Strategic Sourcing

Every industry has its peak seasons and strategic timing when major decisions are made, and the ocean freight and truckload industries are no exceptions.

For those involved in logistics and shipping, tender season is a crucial period that significantly influences market dynamics and pricing strategies. In this blog, we'll explore what tender season is, when it happens, and why it matters.

What is Tender Season?

Tender season is the period during which organizations in the shipping and logistics industry undertake their most important and strategic sourcing events.  During this period, shippers, carriers, and freight forwarders come together to negotiate rates and terms for their transportation services. These negotiations lay the foundation for freight rates and capacity availability for the upcoming year or quarter.

When Does Tender Season Occur?

Tender season typically occurs in specific quarters, and the timing can vary based on the type and size of the company involved. For ocean freight, there are three primary tender seasons:

• Late Q4 to Early Q1: Major shippers with substantial container volumes often kick off the tender season in late Q4 or early Q1. By being early in the process, they set the benchmarks for the market and can influence pricing heading into Chinese New Year.
  
  
• Q1: Medium-sized companies with significant shipment volumes usually participate in the tender season at the beginning of the year. They aim to be part of the negotiations but may not have enough influence to drive significant changes.
  
  
• March to April: Smaller companies and laggards that don't have substantial volume often participate in the tender season at this time. They allow larger players to set the pricing and then fill capacity accordingly.
  
  

For truckload shipping in the US, the tender season aligns with the ocean freight schedule, with many companies going to market in either Q4 or Q1. This choice often depends on their budgetary calendars and the strategic timing of making changes.

Strategic Sourcing during Tender Season

During tender season, most companies focus on strategic sourcing, which involves concentrating efforts on the highest volume lanes to optimize cost savings and efficiency.

To achieve better results, embracing sourcing optimization becomes essential. For those unfamiliar with optimization, think of it as a powerful tool that explores various scenarios to find the best possible outcomes, simplifying complex processes and ensuring easier comprehension for all parties involved.

By integrating multiple cost and non-cost factors, companies can unlock substantial benefits. Optimization not only leads to cost savings but also empowers businesses to make informed decisions swiftly, even when faced with complex bid data and constraints. This efficient decision-making process not only saves valuable time but also indirectly contributes to cost reduction. Sourcing optimization allows for strategic choices that optimize supplier selection while effectively managing supply chain risks to align with specific business needs.

It is also important that shippers aim to avoid wasting carriers' time and their own time on smaller, one-off shipments with minimal impact. Often, shippers launch RFPs that include thousands of lanes, leading to an inefficient allocation of resources.

It is important that shippers aim to avoid wasting carriers' time and their own time on smaller, one-off shipments with minimal impact

To address this issue, many customers in the industry have turned to solutions such as Keelvar Autonomous Sourcing, which offers a more effective and focused way to handle smaller shipments. Autonomous Sourcing enables shippers to quickly and competitively secure rates for smaller shipments through dedicated events, ensuring better attention and pricing compared to burying them in large RFPs.

Summary

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Understanding the best time to go to market and adopting strategic sourcing practices can significantly impact your company's bottom line and efficiency. As the industry evolves, embracing solutions like Keelvar can lead to better outcomes for both shippers and carriers, ultimately benefiting the entire supply chain.

By aligning with the right timing and optimizing your approach, you can navigate the dynamic seas of the shipping industry more effectively. Talk to us today for a demo of how our solutions can help you this tender season.