Contract freight innovation is here

Last September we launched an alternative to the standard contract freight process called Guaranteed Primary. It has been exciting to see others embrace alternatives as well, such as C.H. Robinson with their Procure IQ, Emerge with their dynamic RFP option, and most recently, Uber Freight with yesterday’s launch of Market Access. The growing industry alignment on more flexible procurement solutions reflects shipper recognition that traditional sourcing options are insufficient. 

This is why we launched Guaranteed Primary. We saw the need for a solution that offers the efficiency and quality of a single, consistent, guaranteed coverage provider, along with a transparent pricing and margin structure that enables both sides to feel good about the arrangement whether prices go up or down. Over the past 7 months, the program has been adopted by shippers of all sizes, and it is working. We are servicing both low-volume, inconsistent lanes as well as high volume lanes. 

Guaranteed Primary might not be the best solution for all contract freight scenarios, but the traditional model certainly isn’t sufficient on its own. The freight market swings 3-4 times more than the broader economy and that’s not going away; predicting truck prices far into the future with the precision necessary to manage a contract is, more often than not, more about luck than skill. As a result, traditional contract rates will continue to rarely play out as planned despite the best of intentions from all parties involved, and the true cost a shipper pays is 3-21% higher per mile than anticipated, due to routing guide failure and the overhead costs to manage that. In tight markets, tender rejections are commonplace, as high as 25%+ nationwide (in some local markets, they can get much higher), forcing shippers to move down their routing guide and eventually pay a premium on the spot market. Alternatively, in soft markets, shippers either choose to overpay when contract rates are higher than spot, or opt to break their contracts and risk quality of service to source capacity through the spot boards. 

More and more modern shippers are moving on from this zero-sum game where you either win or lose depending on the state of an unpredictable market. There’s a better approach and we’re all in. On with the freight revolution!

https://convoy.com/blog/introducing-guaranteed-primary/