The days when importers and exporters chose ocean carriers largely on the basis of personal relationships, golf outings, and meetings over drinks and dinner are long gone. Today, international trade professionals understand the need to select carriers based on a thorough evaluation of rates and service, as well as on the carriers' ability to meet their companies' specific needs.

To facilitate the selection process, many exporters and importers issue a bid document called a Request for Proposal (RFP). RFPs, which shippers typically use to identify finalists from a group of candidates, come in paper or in electronic form. They may be long or short, checklist- or essay-style. They can include any number of questions, and the questions themselves may be as individual as the people who write them.

Requests for proposals are useful tools, but if not done properly, they can end up being burdensome for the carrier and producing unsatisfactory results for the shipper. But it doesn't have to be that way. By following some basic guidelines and judiciously applying automation, you can get the results you want from ocean RFPs.

Writing a request for proposal is definitely not a one-person job, says Rob Martinez, executive vice president of Navigo Consulting Group, a Long Beach, Calif.-based firm that specializes in transportation cost management. It's not even a job for one department, he says. Martinez recommends involving any function that will be directly affected by the vendor decision. In addition to the obvious candidates like transportation and export/import, that might include purchasing, sales, customer service, legal, and information technology. Some companies also hire an outside consultant or third-party logistics provider to guide RFP development and evaluation.

Why those groups? Functions that "touch" the customer are directly affected by transportation pricing and service quality. Purchasing, moreover, is likely to know about future sourcing plans, notes international trade consultant Peter A. Giorgio, Jr., of Madison, Conn. "You might put together a plan based on last year's origins, unaware that the merchandisers are looking at [sourcing from] places you haven't shipped from before," says Giorgio, who formerly was director of import operations for Ames Department Stores. The legal department, moreover, has an interest since it must approve any contract, and IT should have a say if the RFP will include information management requirements, Martinez says.

Regardless of who is involved, one consideration applies to everyone, Giorgio says. "Whoever puts it together must understand the criteria that will be used by the person who is ultimately going to make the decision. … You need to know what the [corporate] objective is. Then you can shape the RFP with those factors in mind."

Timing can have a big impact on the quality of responses to an RFP. First off, it's helpful to give carriers a "heads up" and talk about your objectives, priorities, and evaluation criteria before sending them an RFP, Giorgio and Martinez agree.

Because most ocean transportation contracts are negotiated and signed by May 1 each year, it's a mistake to issue RFPs during the spring negotiating season. For one thing, carriers' pricing managers may be so busy finalizing contracts that they can't devote adequate time and resources to preparing proposals. When time grows short, moreover, panicky shippers may feel pressured into cutting corners in the interest of saving time, warns Giorgio. To avoid those pitfalls, plan on evaluating RFP responses and being ready to negotiate terms with your "short list" carriers before the contracting season rolls around.

As for deadlines, shippers commonly underestimate the amount of time carriers need to analyze a bid request, collect data, and write their proposals. A 30-day lead time is reasonable, especially if the carrier has to get quotes from offices in other countries, says one ocean carrier pricing executive who did not wish to be named. Even more time is needed if you conduct site visits and contact customer references. Martinez recommends allowing at least three months for the entire bid process, from writing the RFP through negotiating the contract.

An RFP that's vague and ambiguous makes it hard for the carrier to know what the shipper really needs, says Martinez. That can lead to misinterpretation and incomplete data—not to mention lots of time-consuming follow-up calls.

Issuing an RFP that's drowning in detail and asks for irrelevant or "just in case" information, on the other hand, is counterproductive, says the carrier executive. He's seen RFPs that ask for rates, transit times, and service proposals for moving more than a dozen commodities in various types of containers between hundreds of potential origin/destination pairs. Multiply it all out and the carrier may be faced with quoting on thousands of individual scenarios—many of which are theoretical and don't reflect the shipper's actual needs, he says. Such excessively detailed RFPs can discourage carriers from responding because the time and staff resources needed to prepare a bid could outweigh the benefits of carrying the business.

To avoid such problems, limit the RFP to necessary information, and be as specific as possible. To ensure that carriers are working from realistic data, Giorgio advises, provide a sample of actual quarterly activity. He also recommends breaking down annual volumes by origin/destination pairs, the percentage of annual volume going to each destination, and seasonal patterns. Otherwise, carriers will base their rates and service guarantees on average weekly volumes rather than on actual shipping patterns. (For a checklist of what to include in an ocean RFP, see the sidebar, below.)

Even the RFP's language and format can affect the accuracy of the carrier's response. To make sure your needs are understood, use simple, unambiguous language and keep it as short as possible. Create your document in a consistent format that's easy for the carrier to follow and complete. An electronic document is ideal, says the ocean carrier executive, because it is easier to disseminate to colleagues in other locations as well as to edit and consolidate their responses into a single document.

Finally, Martinez recommends having two people who were not involved in writing the RFP—one who understands ocean shipping and your company's transportation needs, and one who is unfamiliar with the subject—review the document for content and clarity.

One of the most critical factors in successful bid management—impartiality—is also one of the hardest to achieve. That's especially challenging when it's time to make the final choice, says Martinez. "You should have key members of the RFP writing team [on the selection committee], but look for objectivity," he says. "Some people have emotional ties to carriers or relationships with them. They have to divorce themselves from that."

But subjectivity can creep into RFPs long before that stage of the game, Martinez says. Shippers often create documents that are biased toward incumbent carriers because the questions and expectations typically are based on current practices, he points out. To avoid that situation, he encourages clients to have bidding carriers review a draft version for bias and suggest additional service solutions the shipper hadn't considered.

Another way to ensure a level playing field for bidders involves automating RFP creation and evaluation, either with stand-alone software or through a transportation management portal. For one thing, automation allows shippers to build an RFP on standardized templates designed to apply to all ocean carriers. It also creates a single, centralized repository for storing data and lets the shipper control access to that information, says John Urban, chief executive officer of GT Nexus, the Alameda, Calif.-based provider of information services for ocean shippers and carriers.

Most importantly, automation takes much of the subjectivity out of comparing and judging bids. Entering data from carriers' responses into a spreadsheet, for example, creates a visual matrix for comparing basic information like transit times, rates, and surcharges. "As you go through it, you can see right away whether they answered with everything you need, and where the best pricing is by lane," Giorgio says. Most bid-management solutions go a step further, removing opportunities for subjective interpretation by automatically pulling data from electronically transmitted proposals and inserting it in predetermined fields in a comparison matrix.

Sophisticated bid management programs promote objectivity in other ways, too. For example, Martinez notes, you can use software to apply weights or priorities to different lanes and service levels, then objectively calculate how well a carrier meets your requirements in areas that are most important to you. Such programs also make it possible to pair rates with service proposals to quantify the value of cost/service tradeoffs and identify which carrier is offering the best service at the lowest price—a daunting task that's fraught with inconsistencies when done manually, Urban says.

Automating RFPs offers a host of other benefits. It not only speeds the creation, dissemination, and completion of bid documents, but it also shortens the time from initial request to final agreement, Urban says. Collaborative, Web-based applications that manage transactions between ocean carriers and their customers can help shippers conduct "what-if" scenario analyses, he says—a capability that allows them to find more "gold" in information from carriers. Finally, solutions that integrate bidding, contracting, and transportation management make it possible to quickly update information and business rules, continually evaluate carriers' performance against the final contract, and drive activities like bookings and documentation right from the contract, Urban adds.

Automation isn't the be-all and end-all, of course. For some shippers, intangibles like customer service reps who go the extra mile to solve problems, or a carrier's willingness to educate its shipper clients are valid and important considerations. No matter what your priorities are or how you achieve it, though, finding the best ocean carrier for your company depends on issuing requests for proposals that allow you to get the information you need in a way that's both efficient and effective.