The invitation to tender itself is often the biggest problem for the prospective logistics suppliers, due to perceived missing information and to its having been written for an audience of builders and engineers, not simple logisticians. To start with, it should describe (and should state that it is describing) a service contract between the logistics supplier and the client, and not a commodity contract as is commonly perceived.
The service in this case is the entire process: basic expediting to ensure the cargo is ready and packed on the agreed pick-up date; ensuring that all export and other documentation is prepared and all regulations are complied with; and ensuring that the cargo is transported safely and optimally from the pick-up point to the site.
1. Transport Costs
The actual transport costs, which are so often the focus of forwarders’ pricing, are not actually the essence of a project logistics tender, or should not be, as they will change according to the market. They are really just disbursements. This is not to say that there is no need to check that a forwarder’s prices are competitive, but really there should be little difference in third party prices between a selection of good forwarders, and any decision on contract award depends more on their prices than third party prices.
Speaking of which, I am always in favour of tenders that clearly separate company items from third party items, especially to avoid double counting on commissions. Hence, tenders should always have two sections, one for local or own costs-income and the second for third party or outsourced costs. In the case of the latter, it should be specified that any subsequent contract will be “open book”, with third party invoices to be made available to the client, and that these may not include internal non-asset third parties.
2. Incoterms & Handover Points
The invitation to tender itself should clearly outline primary and potential Incoterms, as well as the handover points for cargo. For example, in the case of cargo to be delivered ex-works, it must be made clear who will load it onto the truck. The practicalities of offloading the cargo at the other end of the journey must also be considered
3. Site Delivery Schedule
An initial packing list should also be provided, as far as that is possible, stating its level of accuracy as well as what can be consolidated. There should also be a schedule of site delivery dates for cargo, with the statement that this will change, and that the information is to be used “for tender purposes only.” It is important to remember that once the contract is awarded, the logistics supplier should be given regular updates of these “required on site” dates, procurement plan and the project schedule. In effect, the logistics supplier becomes a member of your team.
4. Compliance Certificates
Obviously, the invitation to tender should require tenderers to provide compliance certificates and signoffs as well as projects experience and relevant case studies. Finally, and for me most importantly, it should request details of the team to be dedicated to the project, basic one-page CVs showing their experience, capabilities, and roles they will play. This is what you are really paying for and so this is possibly the most crucial part of the package. Yet it is often left out.
Now you have a invitation to tender document that covers your needs. Next we will consider the contract award procedure, and setting up the first shipments.
1. Transport Costs
The actual transport costs, which are so often the focus of forwarders’ pricing, are not actually the essence of a project logistics tender, or should not be, as they will change according to the market. They are really just disbursements. This is not to say that there is no need to check that a forwarder’s prices are competitive, but really there should be little difference in third party prices between a selection of good forwarders, and any decision on contract award depends more on their prices than third party prices.
Speaking of which, I am always in favour of tenders that clearly separate company items from third party items, especially to avoid double counting on commissions. Hence, tenders should always have two sections, one for local or own costs-income and the second for third party or outsourced costs. In the case of the latter, it should be specified that any subsequent contract will be “open book”, with third party invoices to be made available to the client, and that these may not include internal non-asset third parties.
2. Incoterms & Handover Points
The invitation to tender itself should clearly outline primary and potential Incoterms, as well as the handover points for cargo. For example, in the case of cargo to be delivered ex-works, it must be made clear who will load it onto the truck. The practicalities of offloading the cargo at the other end of the journey must also be considered
3. Site Delivery Schedule
An initial packing list should also be provided, as far as that is possible, stating its level of accuracy as well as what can be consolidated. There should also be a schedule of site delivery dates for cargo, with the statement that this will change, and that the information is to be used “for tender purposes only.” It is important to remember that once the contract is awarded, the logistics supplier should be given regular updates of these “required on site” dates, procurement plan and the project schedule. In effect, the logistics supplier becomes a member of your team.
4. Compliance Certificates
Obviously, the invitation to tender should require tenderers to provide compliance certificates and signoffs as well as projects experience and relevant case studies. Finally, and for me most importantly, it should request details of the team to be dedicated to the project, basic one-page CVs showing their experience, capabilities, and roles they will play. This is what you are really paying for and so this is possibly the most crucial part of the package. Yet it is often left out.
Now you have a invitation to tender document that covers your needs. Next we will consider the contract award procedure, and setting up the first shipments.