Why You Should Conduct a Market Test Before Signing a Freight Transport Contract
It is advisable for you to conduct a market test with a new freight transport company before you sign a contract with them. This article discusses why it is important for your manufacturing company to conduct that market test with new transport companies.
It Limits Disruptions in Operations
The transition from one freight transport company to another may be disruptive if it is not well managed. For instance, the new company may take longer during the process of loading cargo at your warehouse. This delay may be due to their inexperience in using your proprietary loading equipment. Such a delay may cause other consignments to be dispatched late as the trucks that are taking very long to receive their cargo occupy the loading dock.
A market test allows you to assign limited amounts of cargo to the new transport company while the old transport company handles the bulk of your freight. You can then gradually assign more cargo to the new company as it gets better at meeting your needs. This will ensure that the smooth flow of your freight is not disrupted when a new company comes on board.
It Enables You to Confirm Freight Capacity
A market test also allows you to confirm that the new company has the capacity to meet your needs before you sign a binding contract with them. For instance, you may wish to receive a consignment of materials at a certain time each morning. The market test period allows you to confirm the ability of the new company to have a delivery truck at your premises at the required time each morning. This can assure you that there will be no delays in your manufacturing operations as you wait for needed materials to be delivered.
It Gives You Chance to Adjust Contract Terms
Your employees may have made an error when drafting the bid documents to which different freight companies responded. Any omissions or errors may become known during the market test period. For instance, the bid documents may not have stipulated that you expect the freight company to transport less-than-load consignments (consignments that can't fill a truck). This mistake can cause your company to incur high charges for transporting such small consignments.
However, the market test may buy you time to negotiate how such situations will be handled during the contract period. Your company can then save large sums of money over time using this approach.
As you can see, it is prudent to conduct a market test before you sign a final contract with a new freight transport company. Include this requirement in the bid documents that you send out so that all transport companies that respond are aware of the test period before they submit their bids.