7. Freight Procurement, Pricing and Carrier Relationships

Introduction and Context

Freight procurement is the disciplined process through which a shipper obtains transportation capacity, service, and related logistics support at an acceptable total cost and performance level. It is more than requesting a low rate from a carrier. Procurement decisions influence delivery reliability, inventory requirements, customer satisfaction, working capital, emissions, compliance exposure, and the resilience of the supply chain.

Transportation markets are characterised by fluctuating demand, uneven capacity, fuel-price movements, seasonal peaks, regulatory constraints, empty running, equipment imbalances, and differing service capabilities. Consequently, a freight rate is not simply a price for moving a shipment from origin to destination. It is the economic result of a service design, operating assumptions, risk allocation, and commercial relationship between a shipper and a carrier or logistics intermediary.

This chapter examines the principal managerial activities involved in freight procurement: the preparation of RFQs and tenders, the construction and interpretation of rate structures, contract and spot-market decisions, freight auditing, negotiation, service-level agreements, carrier evaluation, and relationships with third-party and fourth-party logistics providers. The central theme is that effective procurement seeks the best value and controlled risk over the life of a relationship rather than the lowest initial quotation.

Learning Objectives

After studying this chapter, students should be able to:

1. Explain the purpose, scope, and terminology of freight procurement.

2. Design an effective request for quotation and tender process.

3. Analyse transportation rate structures, accessorial charges, and surcharges.

4. Distinguish contract, spot, and hybrid freight markets.

5. Conduct freight audits and identify billing leakage.

6. Develop negotiation strategies and service-level agreements.

7. Evaluate carriers using balanced scorecards and total-cost logic.

8. Assess 3PL and 4PL relationships, governance arrangements, and risks.

9. Apply digital tools and analytics to procurement and carrier management.

10. Make ethically sound and strategically defensible transportation decisions.

Freight Procurement as a Strategic Decision

A shipper’s transportation requirement should be translated into a clear procurement specification before the market is approached. The specification normally identifies shipment volumes, origins and destinations, shipment characteristics, equipment requirements, delivery windows, loading and unloading constraints, documentation, compliance obligations, expected service levels, and the basis on which prices will be evaluated.

A useful distinction is between transportation demand and transportation supply. Demand is generated by the organisation’s order profile, production locations, inventory policies, customer commitments, and sales calendar. Supply is determined by carrier fleets, driver availability, terminals, network density, equipment positioning, regulatory conditions, and the carrier’s opportunity cost of accepting one movement instead of another. Procurement quality depends on understanding both sides.

The objective function should also be explicit. A shipper may prioritise cost reduction, capacity assurance, transit-time consistency, geographic coverage, carbon reduction, or flexibility. These objectives can conflict. For example, a carrier offering the lowest line-haul rate may have poor backhaul opportunities and therefore impose higher tender-rejection risk. A slightly more expensive carrier with dense network coverage may produce lower total cost through greater reliability and fewer emergency shipments.

Important terminology

A shipper or consignor tenders freight for transportation. A carrier physically performs the movement. A consignee receives the goods. A broker generally arranges transportation without necessarily operating the vehicle or vessel. A freight forwarder consolidates or arranges shipments, often across modes or borders. A 3PL provides outsourced logistics services, while a 4PL manages and integrates multiple logistics providers, systems, and processes on behalf of the client.

A lane is a defined origin–destination movement, often with equipment and service attributes. A tender is an offer of freight to a carrier. Tender acceptance measures the proportion accepted by the assigned carrier. Tender rejection occurs when the carrier declines the shipment. Contract freight is transported under pre-agreed commercial terms for a specified period or volume commitment. Spot freight is purchased for an individual movement or short period at a market-responsive price. Accessorials are additional charges for activities or conditions beyond the standard movement. Detention is a charge associated with excessive time spent loading or unloading equipment; demurrage commonly refers to charges for delay involving containers or terminal equipment, although usage varies by mode and jurisdiction.

From Demand Analysis to RFQ and Tender Design

The procurement process begins with data preparation. Historical transportation spend should be segmented by lane, mode, equipment, weight or volume, shipment frequency, service requirement, carrier, and accessorial category. Data should be cleaned for duplicate invoices, unusual one-time movements, incorrect zones, and changes in business structure. Forecasts should distinguish committed volume from uncertain volume. A carrier should not be asked to price a volume promise that the shipper cannot reasonably support.

An RFQ should provide enough information for comparable pricing. At minimum, it should include:

• origin and destination details, including postal or facility codes;
• estimated annual, monthly, and seasonal volumes;
• shipment frequency and typical weight, dimensions, and density;
• required equipment and temperature or handling conditions;
• pickup and delivery windows and expected transit time;
• loading, appointment, detention, and accessorial assumptions;
• fuel-price methodology and currency requirements;
• insurance, safety, security, regulatory, and sustainability requirements;
• proposed contract duration, payment terms, and performance expectations; and
• the required quotation format and submission timetable.

A tender may be a one-round request or a structured multi-round process. In a multi-round tender, an initial bid establishes market positions, clarification meetings address misunderstood assumptions, and a final round tests best-and-final offers. The process must preserve fairness: material information provided to one bidder should be made available to all relevant bidders, and evaluation criteria should not be changed opportunistically.

A technically strong tender separates price discovery from award decision. Price is important, but the award should consider capacity commitment, operational fit, financial stability, safety performance, technology integration, claims history, continuity plans, and the carrier’s ability to support peak periods. A weighted evaluation model may assign scores to cost, service, risk, sustainability, and implementation capability. The weights should reflect business priorities rather than being selected merely to justify a preferred carrier.

Rate structures and total cost

A transportation quotation may contain a base rate, fuel surcharge, minimum charge, accessorials, taxes, tolls, customs-related fees, and special handling charges. Rates may be expressed per shipment, kilometre or mile, kilogram, pallet, container, cubic metre, vehicle, or delivery stop. In parcel and less-than-truckload transportation, dimensional weight and freight classification can materially affect the billable amount.

The analytical task is to convert different quotations into a common basis. For example:

Total freight cost = line-haul charge + fuel surcharge + accessorials + taxes and duties + expected claims and failure costs + administrative costs.

The final terms may also include the cost of inventory in transit, safety stock required because of unreliable service, emergency shipments, loading labour, and transport-management-system transaction fees. These items should not be added mechanically in every procurement exercise, but they should be considered when comparing materially different service designs.

A fuel surcharge should have a transparent index, a stated reference price, an adjustment frequency, and a formula. A common structure is:

Fuel surcharge per distance unit = fuel-price adjustment × agreed fuel-consumption factor.

The contract should specify whether the surcharge applies to the line-haul rate only, how negative adjustments are treated, and whether the index is national, regional, or mode-specific. Ambiguous fuel clauses frequently create disputes, particularly when market prices fall rapidly.

Accessorial charges deserve special attention because they can convert an apparently attractive rate into an expensive service. Typical items include detention, re-delivery, inside delivery, lift-gate service, appointment fees, residential delivery, storage, reclassification, border documentation, stop-off charges, and tolls. A sound contract defines the triggering event, free time, evidence required, charge calculation, and approval authority for each material accessorial.

Contract, Spot, and Hybrid Freight Markets

Contract freight provides a framework for planned capacity and predictable commercial terms. It is suitable when shipment patterns are reasonably stable and service continuity is important. Its disadvantages include the possibility of paying above the short-term market during periods of weak demand or facing capacity shortages if the agreed rate becomes unattractive to carriers.

Spot procurement is flexible and useful for irregular demand, urgent movements, new lanes, seasonal overflow, or market testing. However, it exposes the shipper to price volatility, inconsistent service, limited relationship commitment, and potentially higher compliance or claims risk. A spot transaction should not be treated as ungoverned purchasing; carrier qualification, documentation, insurance, and payment controls remain necessary.

Most mature transportation portfolios use a hybrid strategy. Core lanes are covered through contracted carriers, while a controlled portion is left for spot or mini-bid procurement. The portfolio may also use primary, secondary, and tertiary routing guides. A routing guide specifies the order in which carriers should be offered shipments and the circumstances in which a shipment may be escalated to the spot market.

The appropriate allocation depends on demand volatility, lane density, strategic importance, equipment scarcity, service criticality, and the shipper’s tolerance for price risk. Procurement managers should monitor not only the average rate but also tender acceptance, lead-time stability, rejected shipments, and the cost of excursions outside the routing guide.

Negotiation and Commercial Design

Successful negotiation begins before the meeting. The shipper should understand its volume leverage, lane balance, payment performance, forecast quality, incumbent performance, alternatives, and the carrier’s likely cost drivers. The carrier should understand the operational realities behind the requirement, including loading delays, facility restrictions, forecast uncertainty, and claims exposure. Negotiation based only on a target rate encourages unrealistic commitments and later conflict.

A professional negotiation distinguishes interests from positions. A carrier’s request for a higher rate may reflect driver waiting time, empty repositioning, poor backhaul probability, or excessive appointment restrictions. Solutions may include changing pickup windows, improving forecast visibility, reducing dwell time, guaranteeing minimum volumes, offering balanced lanes, modifying payment terms, or sharing fuel and capacity risks.

Commercial terms should address volume commitments, rate review events, indexation, capacity obligations, tender rejection, service failures, claims, confidentiality, subcontracting, audit rights, termination, force majeure, business continuity, and dispute resolution. A lower rate accompanied by unlimited shipper flexibility may be less valuable than a higher rate supported by capacity guarantees and clear accountability.

Freight Audit and Payment Control

A freight audit compares carrier invoices with shipment records, contracted rates, proof of delivery, accessorial evidence, and agreed tariff rules. It is both a financial control and a source of operational intelligence. Errors may arise from duplicate invoices, incorrect weights or zones, expired rates, unsupported accessorials, wrong fuel tables, incorrect currency conversion, or billing for cancelled or undelivered shipments.

A basic audit workflow is:

1. Capture the invoice and shipment reference.

2. Match invoice data with the transportation-management system and proof of delivery.

3. Recalculate the expected charge from the contract or tariff.

4. Validate accessorial evidence and approval.

5. Resolve discrepancies through deduction, credit, rebill, or dispute.

6. Analyse recurring errors and correct the underlying process.

The audit should not focus only on recovering money. If repeated detention charges arise at one facility, the correct response may be appointment redesign, dock staffing, or carrier scheduling changes. If reclassification disputes recur, product master data and packaging specifications may need improvement. Audit findings should therefore feed procurement, operations, finance, and supplier performance management.

Service-Level Agreements and Carrier Governance

A service-level agreement (SLA) converts general expectations into measurable obligations. It should define the service, metric, measurement method, data source, reporting frequency, target, tolerance, escalation process, and remedy. Common measures include on-time pickup, on-time delivery, tender acceptance, tracking-event compliance, claims ratio, invoice accuracy, dwell time, equipment availability, and response time.

Metrics require careful definitions. “On-time delivery” must specify the promised appointment or delivery window, treatment of shipper-caused delays, permitted grace period, and source of the timestamp. Otherwise, a carrier and shipper may report different performance for the same shipment. Service credits can encourage accountability, but excessive penalties may cause carriers to price defensively or avoid the business. Incentive mechanisms should reward sustained improvement and not encourage unsafe driving, premature status updates, or selective acceptance of easy freight.

Governance should operate at several levels. Operational reviews address daily exceptions and root causes. Monthly or quarterly business reviews examine trends, financial performance, improvement projects, risk, and strategic alignment. Escalation matrices identify decision rights and response times. Contract governance should also include change-control procedures so that new facilities, products, modes, or regulatory requirements are incorporated formally rather than informally.

Carrier Scorecards and Relationship Management

A carrier scorecard should balance cost, service, risk, and relationship quality. A possible framework includes:

• cost competitiveness and invoice accuracy;
• tender acceptance and capacity fulfilment;
• on-time pickup and delivery;
• claims, damage, loss, and safety performance;
• tracking visibility and data quality;
• responsiveness and corrective-action effectiveness;
• sustainability and regulatory compliance; and
• innovation and continuous-improvement contribution.

Weights should reflect shipment criticality. For pharmaceuticals, temperature compliance and traceability may outweigh a small rate difference. For low-value, non-urgent freight, cost and network coverage may receive greater weight. Scores should be supported by reliable data and accompanied by qualitative discussion; a numerical ranking without root-cause analysis can damage productive relationships.

Carrier relationship management is not the same as treating every carrier identically. Strategic carriers may receive joint planning, forecast sharing, lane development, technology collaboration, and longer-term improvement programmes. Transactional providers may be managed through standardised tendering and compliance controls. Segmentation should be transparent and periodically reviewed so that performance and strategic contribution, rather than personal preference, determine relationship investment.

3PL and 4PL Partnerships

A 3PL may provide transportation management, warehousing, consolidation, brokerage, customs support, or technology-enabled execution. Its value can arise from network scale, expertise, systems, labour, carrier access, and the ability to manage complexity. A 4PL typically assumes a broader integrator role, coordinating multiple 3PLs and internal stakeholders, designing the operating model, and managing information and performance across the logistics ecosystem.

Outsourcing does not eliminate managerial responsibility. The shipper must define scope, decision rights, data ownership, pricing transparency, subcontracting rules, audit access, service levels, information security, business continuity, and exit support. The contract should distinguish pass-through transportation costs from management fees and specify how savings are calculated. A gain-sharing arrangement must define the baseline, treatment of volume and mix changes, and whether savings are gross or net of implementation costs.

A major risk is loss of operational knowledge or excessive dependence on one intermediary. Mitigation includes retained internal expertise, documented processes, open-book reporting where appropriate, multi-provider options, data portability, periodic benchmarking, and a tested transition plan. The relationship should be governed as a strategic capability, not merely as a purchase order.

Technology, Analytics, and Emerging Practice

Transportation-management systems can support rate management, carrier selection, tendering, tracking, freight audit, appointment scheduling, and performance reporting. Application programming interfaces and electronic data interchange improve the exchange of shipment status, invoices, proof of delivery, and capacity information. Business-intelligence tools can identify lane volatility, accessorial patterns, carrier concentration, and the financial effects of service failure.

Advanced analytics may forecast demand, estimate spot-market exposure, recommend carrier allocations, detect anomalous invoices, and predict the probability of tender rejection. Machine-learning systems should be used with governance. Data drift, biased historical allocations, incomplete events, cyber risk, and opaque recommendations can produce poor decisions. Human review remains necessary for exceptional shipments, safety-sensitive movements, and major contract awards.

Emerging procurement practice increasingly incorporates emissions data, alternative fuels, electric vehicles, rail and intermodal options, and carbon reporting. Environmental claims should be based on a defined boundary and credible measurement method. A nominally low-emission option that requires substantial emergency road transport may not deliver the expected result. Sustainability should therefore be evaluated alongside service, cost, and operational feasibility.

Risks, Ethics, and Common Mistakes

Freight procurement involves commercial, operational, legal, and ethical risks. Common mistakes include using poor-quality historical data, comparing non-equivalent quotations, awarding solely on headline price, failing to define accessorials, promising unrealistic volumes, ignoring carrier financial health, and changing specifications after bids are submitted. Another frequent error is treating tender rejection as only a carrier problem when shipper dwell, inaccurate forecasts, or unattractive lane balance may be the underlying cause.

Ethical procurement requires confidentiality, consistent bidder treatment, avoidance of conflicts of interest, accurate representation of expected volumes, and rejection of improper inducements. Procurement teams should not use a carrier’s confidential quotation to pressure another bidder unfairly. They should also consider labour, safety, forced-labour exposure, environmental compliance, and subcontracting practices. A rate reduction achieved through unsafe practices or unlawful employment conditions is not a legitimate supply-chain improvement.

Regulatory obligations vary by jurisdiction and mode but may include carrier licensing, insurance, hours-of-service rules, customs requirements, dangerous-goods controls, data protection, competition law, and tax documentation. Contracts should allocate responsibilities clearly, but contractual language cannot excuse the shipper from exercising reasonable oversight.

Illustrative Case: Northstar Appliances’ Regional Freight Tender

Background

Northstar Appliances, a fictional manufacturer, distributes finished goods from two plants to retailers and service centres. Its annual road-freight spend has increased despite relatively stable shipment volume. Finance reports frequent invoice disputes, while customer service reports late deliveries during promotional periods.

Situation and problem

The procurement team discovers that the routing guide assigns almost all volume to the lowest-priced carrier on each lane. That carrier accepts only 78 percent of tenders during peak weeks. Rejected shipments are purchased on the spot market at materially higher prices. The incumbent also bills detention frequently because Northstar’s loading appointments are poorly sequenced. The RFQ data contains annual totals but no weekly profile, accessorial history, or service-window requirements.

Analysis

The team rebuilds the data by lane, week, equipment type, and service requirement. It calculates not only base rates but also fuel, detention, spot excursions, claims, and administrative costs. The analysis shows that the lowest line-haul bidder has the highest rejection rate and that its apparent price advantage disappears when emergency procurement and late-delivery costs are included. A second carrier has a slightly higher base rate but strong backhaul coverage and better peak capacity.

Approach and solution

Northstar issues a revised tender with weekly volume ranges, realistic peak assumptions, standard accessorial definitions, a transparent fuel formula, and service requirements. It awards primary, secondary, and overflow positions rather than all volume to one carrier. The contract includes tender-acceptance expectations, appointment rules, tracking requirements, quarterly reviews, and a gain-sharing mechanism for verified reductions in detention and emergency freight. A freight-audit process is introduced to validate fuel and accessorial charges.

Outcome

In this illustrative case, the organisation’s evaluation shifts from nominal rate to total landed transportation cost. The new arrangement reduces dependence on emergency spot buying, makes carrier performance visible, and creates a joint improvement agenda for dock scheduling. The principal result is not merely a lower quoted rate; it is greater cost predictability and service resilience.

Learning points

The case demonstrates that procurement quality depends on reliable demand data, comparable bids, portfolio design, operational collaboration, and post-award governance. It also shows why the carrier relationship should include the shipper’s own process responsibilities. A contract cannot compensate indefinitely for inaccurate forecasts or avoidable facility delays.

Best-Practice Framework for Managers

Managers can improve freight procurement by following several connected principles. First, define the service before asking for the price. Second, cleanse and segment data, including peaks and accessorials. Third, compare offers on a common total-cost basis. Fourth, use a portfolio of contracted and flexible capacity appropriate to demand risk. Fifth, establish measurable SLAs and reliable data definitions. Sixth, audit invoices and use findings to improve operations. Seventh, segment carriers and invest in relationships that create mutual value. Eighth, govern 3PL and 4PL partners through transparency, decision rights, data ownership, and exit provisions. Finally, review the portfolio continuously because market conditions, network design, customer requirements, and technology change over time.

Chapter Summary

Freight procurement is a strategic process for securing transportation capacity and service while managing cost, risk, reliability, and long-term capability. Effective RFQs and tenders use accurate shipment data, clear specifications, comparable pricing formats, and balanced award criteria. Freight rates must be interpreted through their complete structure, including fuel, accessorials, taxes, claims, and failure-related costs.

Contract markets provide planned capacity, spot markets provide flexibility, and hybrid portfolios combine both. Negotiation should address operational causes of cost as well as price. Freight audits protect financial accuracy and reveal process weaknesses. SLAs and scorecards translate expectations into measurable governance, while carrier relationship management supports continuous improvement. 3PL and 4PL partnerships can add scale and expertise but require strong controls over transparency, data, subcontracting, performance, and exit. Digital systems and analytics improve visibility and decision quality, provided their data and recommendations are governed responsibly. Ethical procurement treats safety, compliance, fair competition, labour conditions, and sustainability as integral to value.

Key Terms

Freight procurement: The process of sourcing and managing transportation services.

RFQ: A request inviting carriers to submit prices and service information.

Tender: A formal offer of freight to a carrier or a competitive procurement process.

Lane: A defined origin–destination transportation movement.

Contract freight: Transportation purchased under pre-agreed terms for a defined period or volume.

Spot freight: Transportation purchased for an individual movement or short-term requirement at market-responsive pricing.

Accessorial charge: A fee for a service or condition beyond the standard movement.

Fuel surcharge: A price adjustment linked to an agreed fuel-price index or formula.

Routing guide: The prescribed sequence of carriers to which shipments are offered.

Tender acceptance: The percentage of shipment offers accepted by an assigned carrier.

Freight audit: The examination of invoices against shipment records and contractual terms.

Service-level agreement: A documented set of measurable service obligations and remedies.

Carrier scorecard: A structured evaluation of carrier cost, service, risk, and relationship performance.

Detention: A charge associated with excessive loading or unloading time.

3PL: An external provider of outsourced logistics services.

4PL: An integrator that coordinates multiple logistics providers and logistics processes.

Total transportation cost: The full economic cost of transport, including direct and relevant indirect costs.

Gain sharing: An arrangement in which verified savings are shared between contracting parties.

Review Questions

Short Answer Questions

1. What is the difference between contract freight and spot freight?

2. Why should an RFQ include accessorial assumptions?

3. What is the purpose of a freight audit?

4. Define a service-level agreement.

5. What is a routing guide?

Long Answer Questions

1. Explain how a shipper should design and evaluate a competitive freight tender.

2. Discuss the components of a transportation rate structure and the importance of total-cost analysis.

3. Explain how SLAs, scorecards, and business reviews support carrier governance.

4. Compare the benefits and risks of 3PL and 4PL partnerships.

5. Analyse the role of negotiation in creating sustainable carrier relationships.

Analytical / Application Questions

1. A carrier offers the lowest line-haul rate but rejects 20 percent of tenders during peak periods. How should the shipper evaluate this offer against a higher-priced, more reliable carrier?

2. A company’s freight audit shows recurring detention and reclassification charges. Identify possible root causes and propose a corrective-action plan.

3. Design a hybrid contract-and-spot procurement strategy for a business with stable base demand and highly seasonal promotional peaks. Justify the allocation and governance controls.

22. Multiple Choice Questions with Answers

Question 1

Which factor most directly improves comparability among carrier quotations in an RFQ?

A. Allowing each carrier to use its own accessorial definitions

B. Providing standard shipment, service, fuel, and accessorial assumptions

C. Evaluating only the lowest line-haul rate

D. Excluding seasonal volume from the request

Correct Answer: B. Providing standard shipment, service, fuel, and accessorial assumptions

Question 2

Why can a carrier with the lowest quoted rate produce the highest total transportation cost?

A. It may reject tenders, causing expensive spot purchases and service failures

B. It is always required to use premium equipment

C. Its fuel surcharge is legally fixed at zero

D. It cannot issue transportation invoices

Correct Answer: A. It may reject tenders, causing expensive spot purchases and service failures

Question 3

What is the principal purpose of a routing guide?

A. To calculate customs duty

B. To specify the sequence in which carriers should receive shipment offers

C. To replace all carrier contracts

D. To determine product selling prices

Correct Answer: B. To specify the sequence in which carriers should receive shipment offers

Question 4

Which item is most important in a transparent fuel-surcharge clause?

A. An undefined market reference selected after invoicing

B. A stated index, reference price, formula, and adjustment frequency

C. A prohibition on reviewing fuel prices

D. A surcharge that applies only when the carrier loses money

Correct Answer: B. A stated index, reference price, formula, and adjustment frequency

Question 5

A freight audit identifies repeated detention charges at one distribution centre. What is the best initial managerial response?

A. Automatically terminate the carrier

B. Ignore the charges because they are accessorials

C. Investigate appointment, loading, staffing, and dwell-time causes

D. Remove all delivery windows

Correct Answer: C. Investigate appointment, loading, staffing, and dwell-time causes

Question 6

Which measure is most likely to be ineffective if its definition is ambiguous?

A. On-time delivery

B. Annual contract duration

C. Invoice currency

D. Carrier legal name

Correct Answer: A. On-time delivery

Question 7

What is a key advantage of a hybrid freight procurement strategy?

A. It eliminates all market volatility

B. It combines planned contract capacity with flexibility for variable demand

C. It avoids the need for carrier qualification

D. It guarantees that every shipment uses the same carrier

Correct Answer: B. It combines planned contract capacity with flexibility for variable demand

Question 8

Which practice best supports ethical freight procurement?

A. Sharing one bidder’s confidential rate with another without permission

B. Changing evaluation criteria after receiving bids

C. Applying consistent information and criteria to relevant bidders

D. Awarding solely to a carrier offering unsafe operating conditions

Correct Answer: C. Applying consistent information and criteria to relevant bidders

Question 9

What distinguishes a 4PL from a conventional 3PL relationship?

A. A 4PL necessarily owns every vehicle used

B. A 4PL typically integrates and governs multiple logistics providers and processes

C. A 4PL performs only freight auditing

D. A 4PL cannot use technology platforms

Correct Answer: B. A 4PL typically integrates and governs multiple logistics providers and processes

Question 10

Which cost is most appropriately included when evaluating total transportation cost in a service-sensitive supply chain?

A. Only the published line-haul rate

B. Relevant emergency freight and failure-related costs

C. The carrier’s unrelated office rent

D. A competitor’s unverified marketing estimate

Correct Answer: B. Relevant emergency freight and failure-related costs