Tendering Transport - Lessons Learnt 1

Large investment in equipment with only deployment for the main customer

A traditional tender was issued for transport mainly from storage locations to factories back and forth. Required were approx. 20 trucks dedicated with 60 m3 bulk trailers.

It was local transport with high usage (365 days at 24h). A number of trailers had to be adapted with special generators to keep the load during the transport liquid and were only deployed during fall and winter.

Since it was local transport, only three carriers in this particular area were interested and had the capacity; the current carrier and two other local carriers.

Events developed as follows:
• Number three was afraid to be dumped after the contract period and then to get left with the fleet. He declined after he found out the details of the project.
• Number two was already working for the main carrier (subcontractor) and was afraid when he lost the tender process; he would have upset the main carrier (his client after all). Number two also declined.
• Number one, the current carrier, used his renewed strong position and confronted the customer with his new and unfavorable position.

He offered them a new 5 year contract with absurd high prices and was threating to stop the transport service. This would immediately stop 5 factories with 700 people working. The carrier could do that unpunished while the official contract period was over.

In the end, the client managed to convince number two (the current subcontractor) to quote for the transport although he would get into a dispute with the current main carrier.

In the end the main carrier lost the tender process and the subcontractor won the contract.

It was a close call, things got very messy and parties ended up settling things in court.

Lesson Learnt:

If you depend on the local market, start with local research before launching a tender. Don’t assume everyone will fall for new business.