One of the most exciting yet intimidating things a freight broker can hear from a potential customs is that you have been invited to participate in an RFQ. I remember the first RFQ I was given I was full with a mix of emotions so if you find yourself in the position of a freight broker or carrier receiving an RFQ, I’m going to help you navigate that in this article. While an RFQ is never a guarantee that you are going to receive business, it does represent an opportunity for you to enhance your relationship with a shipper, and to earn life changing money in the event you are awarded some, or all of the lanes that you bid on.
What is an RFQ?
An RFQ for a freight broker, or “Request For Quotation” is a bidding process used by shippers to obtain the lowest shipping rates for their shipping schedule. There are multiple participants in an RFQ bidding on lanes which may run anywhere from 1 month to the entire year.
Why do Shipper’s Use RFQ’s?
Shippers use RFQ’s for a couple of reasons, the main one being to cut as much costs as possible for their transportation budget.
RFQ’s enable a shipping manager to collect pricing from a large volume of freight brokers and carriers and this information helps them make the best shipping decisions for the entire year. It is a very organized way for a shipper to collect a big volume of data and do their job’s to the best of their ability.
Are RFQ’s Worth it For Freight Broker’s
Now that we’ve defined what an RFQ is, we can get a little bit deeper into the methodology of handling these documents. At the end of the day, as a freight broker, the “worthiness” of anything depends on a few factors. Can I as a freight broker turn a profit? Will it take me too much time to fulfill this service? Can I fulfill what I promise and maintain a high level of quality? The answer then to whether RFQ’s are worth it, may seem like a no from the surface.
Think about it like this. You are filling out a spreadsheet with 100’s to 1000’s of lanes. You know for a fact that there are dozens of brokers and carriers you are up against with the same goal in mind as you. The odds of any work coming from this business is slim, and even if you do receive any of the lanes as “awards” you are not going to have much profit margin in the rate that won.
So, how do we use RFQ’s to our benefit? RFQ’s, while they may not materialize into anything, benefit freight broker’s because they act as a doorway to further conversation.
Even though my brokerage has never really benefited from an RFQ, we continue to fill them out per our customer’s requests year after year. The reason is two fold.
- We do anything for our customers if it makes their lives easier.
- Having a price on file is better than not having one at all.
We are in the yes business with our customers. If they want us to fill out an RFQ, even if we know based on past experience that we probably won’t win any lanes…we fill that thing out as fast as possible. It’s basic level customer service and showing our customers that not only are we in their corner, but we are willing to do whatever they need to make their lives as a logistics manager, easier.
The other benefit we get from filling out these RFQ’s is that essentially we are staying on the customer’s “shortlist”. We know that a vast majority of of carriers and broker’s fall through on these RFQ requests, and when that happens, the customer does not go out to random broker’s to get their loads recovered.
They go out to the ones who submitted an initial response to their request in the first place.
So, this is basically a long winded way of saying that on the surface, no, RFQ’s are not worth it in terms of the business you will gain. But they are worth it due to the intrinsic value you will get by making your customer happy.
Closing Thoughts
I know that RFQ’s can be intimidating at first and I also know that there is no “guide book” when it comes to figuring them out as a freight broker, regardless of what level you are at. The secrets to expertly navigating an RFQ are closely guarded by the largest broker’s, and that is why I created this article and video. To give you that small boost of confidence you need to fill out, quote and hopefully win some jobs from the RFQ you are facing right now.
Of course, if you want my support with your RFQ’s and you want the help from a community of freight broker’s all chasing the same goal, you may want to consider joining the Freightskills academy. We cover everything and help our student’s get through these RFQ’s like a seasoned pro.
