||This research studies the issues related to strategic sourcing and bid optimization for ocean freight. It is based on a real project for a global Top 10 electronics company. It considers the specific domain requirements of ocean freight and integrates the process of sourcing and bid optimization together, which has not been done in the literature. This research looks into four keys aspects, setup of the auction, carrier selection, negotiation, and bid optimization and allocation. To facilitate the whole process of transportation procurement, advanced computer technologies are investigated in order to computerize the process. On the bid optimization and allocation part, various domain-specific constraints are studied, such as minimum quantity commitment, maximum over average constraint in space protection during peak season. Appropriate optimization engine is developed to meet the company's specific and complex constraints. The optimized result is proven to be near optimal and reasonable for business. A transportation procurement and bid optimization system is built for Philips as direct outcome of this research. The procurement process is studied and reengineered to improve its effectiveness and efficiency. The data format within this process is standardized. The system is now formally deployed to help the company carry out its transportation procurement of year 2005. A lot of human efforts have been saved from doing tedious and burdensome data processing and calculation.