Thank you everyone for joining me for module twenty three. And in this particular module, we are going to discuss the different types of bids and what's consistent within the framework of offering a competitive bid. So pay close attention to this module as well, because all of these are things that you will need as you go out and try to develop your own book of business. him. So in the industry, there are basically two types of bids. The first one is what's called a spot bid. And then you have another bid that is called a contract bid. So those are the two biggest types of bids in the industry. And we're going to go ahead and discuss exactly what these mean in this chapter. So the first one that we're going to talk about is what is a spot bid? What is that? A spot rate or spot quote is a one-time fee that a shipper pays to move a load or shipment at current market pricing. Spot rates are a form of of short-term transactional freight pricing that reflects the real-time balance of carrier supply and shipper demand in the market. So what this means, guys, is let's say you have a shipper. And let's just say he moves all type of freight throughout the week. I'm sorry, all type of lanes. for his freight throughout the week, Texas to Atlanta, Texas to California, Texas to Jersey, Texas to Ohio, you know, just everywhere, stuff just shooting all over the place out of Texas, right? So what the shipper may do is ask you, okay, You may get emails because this is another thing. Shippers ask for bids in all types of ways. They may call you on the phone. Now, this is probably the least used version. But, you know, your shipper may prefer maybe he's not tech savvy, so he didn't like to send emails or whatever. He just he just wants to pick up the phone and ask you for a bit of rate. You know, he might say, hey, I've got a lane coming out of Dallas, going up to Cincinnati. What are you going to charge me for that? OK, and then it'll be your job to, you know, run that quote for him and give it to him. But that's that's what's called a spot rate. It's just something that the shipper is asking for to pay a one time fee for that particular lane. OK, so in which, you know, he may ask you again for that same lane next week, but it's just a one time quote. OK, so whatever the rate, whatever the market rate was for what for the lane that you quoted him from Dallas to Cincinnati last week. OK, and if he calls you next week. and ask you what you'll charge him, the market rate may have changed from last week to, you know, to where it is now. And if that's the case, then your quote may be higher or it may be lower, just depending upon what the market rate is, okay? So, I mean, we could actually, you know, let's give, let's do this. Let's... pull up some examples of how this would work. Of how this would work. So let's say, you know, you're using DAT load board. And let's say you have a shipper that, like I say, gives you a call, says, hey, so-and-so, I've got a Got some building materials that I need to get up to Cincinnati. Okay. I need to put them on a flatbed trailer. Okay. So how much would you charge me for that? So what you do is you come out to whatever load board you're using. or whatever system that you're using to look at market rate lanes, okay? Which typically is done from load boards, either DAT or truck stop, okay? And so you see right here that this is the average market rate for this lane right now. Lower end is two forty-one, higher end is two eighty-one, average is two sixty-three. So you may pull out your handy dandy calculator Actually, you don't have to do that. I'm sorry. You can just kind of click here. It tells you. OK, so this lane on average goes for twenty four sixty seven. So you may tell your shipper, OK, yeah, we can run that for twenty four sixty seven. OK, and that's what a spot bid or a spot quote is. But now, like I say, next week, these numbers may be different. So if he calls you next week and says, hey, I got another lane, another load going out the Cincinnati. The average then may be two seventy five. OK, so if you're quoting strictly on what the average is, you know, two dollars and seventy five cents a mile times nine hundred and thirty eight miles is two fifty seven. I'm sorry. Twenty five. Twenty five. Seventy nine. which is higher, obviously, than to for a twenty four sixty seven. So if he's just asking for spot rates, this is what spot rates are. OK, it's it's giving it's charging or quoting a one time fee based on that lane. OK, so hopefully that helps you to understand. What spot bids are now. Moving on. Let's see here. Okay, moving on. So now we're gonna talk about what contract bids or rates or quotes are, okay? A contracted rate is a rate a shipper and a logistics provider agree on for a specific lane and certain time period. That's typically from three months to a year. okay contract rates are usually calculated based on a shipper's estimated freight volume and it for in a provider's cost per mile okay so if that were the case guys let me we're gonna um let's pull up truck stop for this one okay so let's run with that same scenario um Dallas to Cincinnati, right? Now, let's say this shipper has decided, you know what? We run this lane a lot, you know, for the year. And at this point, instead of charging me for every time I move one of those loads, I want to see if we can go ahead and put this load under contract. OK, which means I'll give you all of the Dallas to Cincinnati lanes that we have throughout the year. And. And if I do that, you know, let's say we run this lane, you know, seventy five times a year and. And yeah, I want to know what you would charge me. So, again, with the contracted rate, we are looking at. charging him a specific amount now for what would be the entire year or three months or six months, whatever it is he's asking you for. Now we have to take into consideration how much this lane fluctuates per year in price. So this is a little different, guys. You're going to kind of apply a different formula when quoting this type of lane to your shipper. Now, the best way to do that, guys, me personally, I would take, for example, most of the time when you're doing contracts, shippers tend to want to do them for the entire year, okay? So if that was the case, I would take, this is, so what I would do since isn't complete, I would do one of two things. I would either start January, and go look at what the rate was starting in January of all the way to December. Cause you see this little graph here represents the change and what the average is. Per mile. Okay. So I would either go from January to December. Okay. You're going to get whatever the market rate was for that month. You're going to write it down guys on a piece of paper. And once what you do is you will add up all twelve of these months. Should I do this? Maybe I should just do this for you guys. Okay, let's let's Let's do this because I'm such an awesome trainer. I want you guys to have this information. So we will pause for the cause and do this. Now, what I was going to say is you can either take all the months for the prior year, or if you would rather, you can, since we're in the month of September, you could start at September, and go down to, I'm sorry, we're in October, but obviously October hasn't generated yet because we're still in it. So the last average for the month we have is September of twenty twenty two. You can either add up all the months for twenty twenty one from January to December or you can add up. months starting at september twenty twenty one september twenty twenty two I honestly would probably do that because it's going to give you um a little more accuracy as as far as you know where this lane would be or what a good quote would be for this lane okay so what we do we're going to start in september of twenty twenty one here we go what was september okay so september was twenty six let me just do this twenty six thirty one october was twenty six thirty four november was twenty six eighty eight December was twenty seven forty two. January is twenty seven eighty nine. February February was twenty seven fifty nine. March is twenty eight forty five. April is twenty eight eighteen. May twenty nine oh seven. June twenty nine fifty seven. yeah hold on may june july twenty eight seventy seven actually I apologize guys you would go from september twenty twenty one to august that gives you that gives you twelve months twelve rates uh-oh Twenty six. Thirty two. OK, so this should be twelve months. One, two, three, four, five, six, seven, eight, nine, ten, eleven, twelve. There we go. OK. Which represents one year worth of rates. Correct. Yes. What we're going to do. Twenty six. Thirty one. Plus twenty six. Thirty four. Twenty six. Eighty eight. plus twenty seven forty two plus twenty seven eighty nine plus twenty seven fifty nine plus twenty eight forty five plus twenty eight eighteen plus twenty nine oh seven plus twenty nine fifty seven plus twenty eight seventy seven plus twenty six thirty two okay but that gives us thirty three thousand two hundred and sixty eight dollars right we want to divide that by twelve months okay since that was twelve rates we want to divide that by twelve months and that's going to give us the median okay that's going to give us the median that we will want to quote the shipper um gives us the average of all those months so we're going to divide that by twelve and that comes to twenty seven seventy two okay and thirty thirty three cents if you want to be a little petty no um a twenty seven seventy two okay so this this would be an idea number to quote um to quote your shipper okay um now let's take a look so we started in september of twenty twenty one right so some months you are going to do great with that contracted rate okay and then some months you are going to struggle with that right reason being is that you know we added all those numbers up and it gave us the average so in the months uh here you know september october twenty six, thirty four. You've got a little wiggle room. So if you're putting this out on the board. You've got twenty seven, seventy twenty seven hundred and seventy five dollars. You know, if you're, you know, maybe selling this for around twenty six hundred or so and you're pocketing one hundred and seventy two dollars, you know, profit, which is pretty good. You know, it's not so bad. Yeah. Now, as we get on the higher end here, twenty seven, forty two, you know, twenty seven. Twenty eight, forty five. You know, if these rates reflected now are similar to what is upcoming. You know, for these months and these months, you're going to, you know, maybe have some issues, you know. So another thing you want to keep in mind. I mean, it goes both ways, though, guys. Some months, just based on whatever the contractor rate is you have, you're going to do great. Some other months, it's going to be a little tough. And keeping this in mind, you want to always go, and this is covered more than one time in this course, but your profit margins should always be for ten to fifteen percent of whatever the rate is okay so if you quoted your shipper um um uh oh twenty seven seventy two times ten percent is two hundred and seventy seven dollars so that should be your minimum minimum profit goal now if that's the case um in order to get that twenty seven seventy two minus two hundred and seventy seven dollars that means you're gonna have to sell this for around twenty four hundred dollars okay so or just round up and say twenty five okay you're gonna have to sell this for around twenty five hundred dollars now um where did we start at twenty twenty one We started at September. So with that in mind, guys, do you see the average rate around here was about twenty six thirty one. OK. Keeping in mind, that's average lower end. Lower, at least right now, this is this is. This is current. OK. Lower in twenty one hundred. It doesn't show what the lower end. is I wish that truck stop had this here. It's just going to simply show you the average. But the point that I'm getting at is just because that's the average, that doesn't mean that's what you have to sell it at, okay? You might not have the money to sell it at for what's average. So you may have to sell at whatever the lower end is of that rate, okay? Of that average rate. So, you know, lower end, you might be able to swing twenty four hundred during the months of You know, August, twenty six is average. You could swing it for twenty five. You know, it's not too far away from twenty six, even twenty seven. When it gets on up here to twenty seven, you could still move that for about twenty five. It just it's just a lower end rate. But you're still meeting your profit margin. OK, you're still meeting your profit margin. Now, when we get on up here in May and June twenty nine hundred. That's a tight squeeze, okay? If the average is twenty-nine, you trying to sell it for twenty-five may work, it may not work. It just really depends on the lane, you know, and it depends on... demand? You know, are there a lot of trucks in wherever it's picking up from? You know, are there a lot of other shippers out that way? So does the driver have options or is he in a rough place that he's going to kind of be more flexible on because he's trying to get out of there? Those types of situations. Okay. So this is something to keep in mind when you are quoting your shipper. You may want to also ask your shipper, well, what months do you move the most freight? okay because if he moves the most freight in these higher end months well then you may want to go up on that twenty seven seventy two you quote him because if he's moving the majority of his freight in the months where this lane is twenty nine hundred or twenty you know twenty eight hundred then you're going to struggle a lot if that's the month he's moving most of his freight. So you may want to up that. But if he's selling, you know, most of his freight around these times when we're in the twenty sixes or, you know, whatever the case may be, you're going to be great. You're going to do great. You know what I mean? Because you could definitely move that lane for twenty five hundred easily on something like that. you know because it's only about a hundred bucks off so drivers will be pretty open to that and that's the average rate you know so um so yeah I just want you guys to understand the difference between uh contracted rates and spot rates hopefully this kind of clarifies that um That's what a contracted rate is, guys. That's when a shipper reaches out to you and says, hey, I want to get a contract on this because we move this lane a lot and we just want to get a good deal on the lane. Now that you understand the difference, you also should understand how to go about calculating that for the shipper. Now, in the event that anybody asks you for one of those, you know exactly what to do, guys. All right, so that's gonna conclude the end of this chapter. As always, I wanna thank you for your time and I will see you guys in the next video. All right, guys, I think this video or this module is very informative. It shows you how what the things you need to consider and how you need to contemplate your approach to making a bid. That is something that you do not want to do off the top of your head. You want to do your due diligence. You want to do your research. Because with a lot of these bids and you're bidding on lanes, once you give them that rate, you're locked into that rate for X amount of time. And this works primarily to the shippers benefit because they know the market fluctuates up and down. the economy is you know combustible uh it's a variable so you want to give a lot of things consideration I like how she brought up in the video you want to take last year's average and see how much the uh rates uh ballooned uh from maybe june to d or january to december see how much of an increase it was and then that might give you an idea of how you need to uh uh price your uh your bid so I thought this video was very informative and um I think it's very beneficial and very helpful and we'll talk about this more as time goes on and as we keep going through the different training courses all right now it's time for the next module guys