How to bid on freight contracts: A guide for trucking carriers

Bid on freight contracts and grow your trucking business

As a trucking carrier, bidding on freight contracts is an integral part of securing profitable business and maintaining a steady flow of shipments that keeps your trucks on the road. This guide on how to bid on freight contracts will walk you through the process of freight bidding, including types of bids, how they work, and strategies for making competitive offers.

Understanding different types of freight bids

A good starting point before you start to bid on freight contracts is to understand the type of freight you plan to bid on, and how the type of freight can affect your bid negotiation. There are several common types of freight bids that carriers should be familiar with:

These are long-term contracts, typically lasting one year, where carriers bid on specific lanes or routes. Annual bids provide stability and predictable volume but may have less flexibility in pricing.

Example of a traditional annual bid:

  Lane: Chicago to Los Angeles
  Equipment: 53' Dry Van
  Weekly Volume: 5 loads
  Rate: $2.50 per mile
  Additional Services: Real-time tracking, 2-hour notification before delivery
  Contract Duration: 12 months

Mini-bids

Mini-bids are shorter-term contracts, often lasting a few months, that allow shippers to secure capacity for multiple shipments without a lengthy contractual obligation on the part of the trucking carrier. They can be useful for addressing seasonal fluctuations or market changes.

Example of a mini-bid:

  Lane: New York to Miami
  Equipment: Refrigerated Trailer
  Weekly Volume: 3 loads
  Rate: $2.75 per mile
  Duration: 3 months (June-August)
  Special Requirements: Temperature monitoring with recorder, real-time tracking

Spot market bids

Spot market bids (also sometimes known as spot bids) are for one-time or urgent shipments. They often command higher rates due to their immediate nature, lack of advance planning and the level of difficulty a carrier may encounter when trying to book return a return load.

Example of a spot market bid:

  Origin: Dallas, TX
  Destination: Phoenix, AZ
  Pickup Date: November 6, 2024
  Delivery Date: November 8, 2024
  Equipment: Flatbed
  Rate: $3.19 per mile

Dedicated service bids

Similar in some respects to an owner-operator lease agreement (but not entirely) dedicated service bids are for carriers who are willing to provide exclusive services to a shipper, essentially acting as a de-facto private fleet. While potentially much more lucrative than a lease agreement, fulfilling these freight contracts can require significant levels of commitment and additional resources on the part of the trucking carrier.

How freight bidding works

The process to bid on a freight contract typically follows these 4 steps:

How to bid on freight contracts:  Overview of the bidding process

1. Find loads or request-for-proposals (RFP's) posted by a freight broker, shipper, third-party logistics provider or government agency such as the United States Military  Popular shippers, brokers and 3PL's often post their freight requirements on free load boards or bidding platforms, but most successful carriers also find freight contract opportunities thought marketing themselves and networking with local manufacturers and shippers.  Registering as a vendor with government agencies like sam.gov can also help.
2. Submit a bid  Carriers analyze and research the postings, submit bids for loads they can transport profitably using the contact information you find in the freight posting.
3. Your bid is evaluated  Your bid on the freight contract will be assessed by the potential freight customer, and compared with any other bids they receive.  Bids on freight contracts are generally reviewed, assessed and judged based on factors like price, carrier qualification ratings and reliability, insurance, and delivery capabilities. Carriers that are minority-owned, woman-owned, veteran-owned are also given consideration in many cases so it is always helpful to clarify your ownership status when you bid on freight contracts, particularly if you are a certified business under the SBA 8(a) Program.  
4. The contract is awarded to the winning bidder The shipper selects the winning bid and finalizes the agreement with the carrier through a written legally-binding freight contract.

Making competitive bids and winning freight contracts

To increase your chances of winning freight contracts, consider these tried-and-true strategies:

5 keys to remember when you bid on freight contracts:

1. Know your operating costs & overhead  Calculate your business costs carefully and accurately, including fuel, maintenance, driver wages, insurance, factoring, compliance and overhead. This ensures you bid at rates that are both competitive and profitable.
   
2. Keep up-to-date with market research  Stay informed about current market rates and capacity in the lanes you're bidding on. Tools like DAT and EIA can provide valuable insights on pricing and expenses.
   
3. Always point out the strengths of your business  Emphasize your company's unique selling points, such as related experience, on-time delivery record, specialized equipment, driving record, USDOT safety rating, and/or exceptional customer service.  Business references that are directly relevant to the contract can also be very helpful.
   
4. Be clear, concise, detailed & accurate  Provide comprehensive information in your bid but stay strictly on point.  Including precise pickup and delivery times, communication processes, any additional services offered that are relevant to the freight contract, and crystal-clear pricing.
   
5. Strongly consider offering volume discounts & bonuses  For larger contracts, consider offering tiered pricing based on shipment volume to make your bid more attractive and encourage repeat business.  Never be afraid to negotiate if you believe the business relationship is worth it!
   

Example bid on a 12-month freight contract by a trucking carrier

Additional resources

Here are some additional resources you can use to help your business become more competitive in freight bidding and win more bids for your trucking company:

Where to learn more about bidding on freight contracts

• Industry publications in your target market (i.e. fruit growers, equipment manufacturers, or auto haulers) 
• The Bureau of Transportation Statistics provides extensive government data on freight movements and economic indicators
• Join industry associations and groups like the American Trucking Associations (ATA) and Owner-Operators Independent Drivers Association (OOIDA) to connect with peers and stay informed.

And here are some resources you can consider to further develop your bidding skills:

Develop your bidding skills

• Attend popular truck shows, industry conferences and webinars
• Analyze your past bids, both successful and unsuccessful, to identify patterns and areas for improvement.
• Invest in a high-quality transportation management software (TMS) platform to streamline your bidding process and improve accuracy.
• Focus on continuously building your relationships with your freight shipper and broker customers and gain unique insights into their needs and preferences.
• Ensure you have access to a good transportation and contract law attorney who can help you avoid any potential pitfalls
• Maintain a good relationship with an insurance agent who knows how to adapt your coverage to meet the needs of your freight customers
  
  

Conclusion:  A successful strategy to bid on freight contracts is the key to a profitable expansion of your trucking business

By understanding the freight bidding process and continuously refining your approach, you can increase your success rate in securing profitable freight contracts for your trucking business. Remember, successful bidding is not just about offering the lowest price, but about providing the best overall value to your customers.