Tendering Transport - Lessons Learnt 3

Important data forgotten, factory down for 3 weeks

A carrier engineered a new vehicle to haul a hot and viscous liquid. During the transport the liquid must be kept at 60 degrees Celsius by heating engines. The carrier had invested in three special trailers and set up 2 teams who dedicated supplied the factory in Sweden. An open calculation model was used and transports where running smooth. It was co-makership.

A new and unexperienced buyer was introduced who tendered this transport the classic way. He didn’t want an open calculation model but wanted fixed prices and didn’t take into account the specific required equipment either.

A tender was issued for the transport of syrup from A to B. Since the presented new rates were far below the current prices, the contract with the current carrier was cancelled.

Since the contract mentioned a 3 months’ notice-period, the current carrier was offered them two options: lower prices for three months or stop with the current transport and let the new one take it over. The current carrier chose the 2nd option and stopped his services.

A week later the new carrier turned up with a liquid tanker and was loaded with the hot and viscous liquid. During transport the product cooled down and got stuck in the tanker. The product couldn’t be unloaded and the product was lost. Since the factory was dependent on the daily supply of syrup, the processes stopped in 2 days.

A factory with 100 people was down. The new carrier tried to buy the old equipment from the old carrier but did not succeed. He declared a breach of contract and bailed out.

The client went to the old carrier and asked them to start up the transport again. The old carrier declined and was not willing to sell the equipment. They threatened to reimburse them with the costs of the downtime of the factory but the carrier knew he had nothing to do with that. This went on for two weeks where the plant in Sweden was still down.

After three weeks the management realized that they had made the mistake in the first place. Negotiations where restarted with the ‘old’ carrier on an equal basis and a new contract with open calculations was set up.

Lesson Learnt:

Some details are overlooked easy but may end up very important. Not all transport can be tendered traditional way.