Aggregate Tender Rate
The Aggregate Tender Rate (ATR) is the average rate at which bids are accepted for transportation services. It is calculated by taking the total value of all accepted bids divided by the total quantity of freight tendered. This metric can be used to evaluate the competitiveness of a given market and to identify areas where rates may be becoming uncompetitive.
The rate includes paying for the services of transportation companies, as well as the cost of fuel and other related expenses.
The aggregate tender rate is often used as a benchmark when negotiating rates with transportation companies, as it gives businesses a good idea of what is considered reasonable. In addition, the aggregate tender rate can help businesses make informed decisions about where to locate their warehouses and distribution centers in order to minimize shipping costs.
For example:
If a company is tendering 5,000 loads and accepting 50% of the bids received, then its ATR would be 10. If they are tendering 20,000 loads and accepting 50%, their ATR would be 4. In this case it is clear that the first company is receiving more competitive rates.
Rate increases can be said to be competitive if they are within or near the ATR of a market. Increases that greatly exceed the ATR have been shown to discourage shippers from bidding their services, which can lead to less competitive rates. In addition, increases that fall significantly below the average rate may not provide enough incentive for transportation providers to increase their capacity.
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Aggregate Tender Rates Definition – Operations & Supply Chain Dictionary
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