Our Opinion
Pricing will always be a challenge. Customers want Best Value - probably more than Low Cost.
We are asset based – we own our trucks and network.
You understand - You build a quality product that will last for years. Your competition pretends to a offer something similar at a lower price. It is not the same -
Our competition is many times a broker. Sometimes a general freight haulers that tries to mimic a white glove service or brokers.
Asset based - start to finish - through a quality controlled network is critical for safer shipping. The company delivering your product is a reflection on you.
Does the company you choose - their driver and network - work with high value, sensitive commodited every day? If it is not central to what they do and they work with freight of all kinds - do they end up treating all freight the same.
Eventually - if you don't control the process - there will be claims and customer service issues. How many times can they explain away the damage and customer service issues? How long will you accept these explanations? Brokers are never at fault - they didn’t really do anything but select someone for you.
We like control – we want to talk to our driver. I want total visibility of even
other freight on board. You cannot control quality if you have no control. We could broker out at a lower cost to you – even more retained money for us. Many companies consider asset based verses 3rd parties that hire others to do the work. Experienced purchases determine asset based solutions most of the time. Your product should be handled by an
asset based company.
Price is always a factor. Higher costs can keep you from winning a
bid. a bid n cost you a jhite glove service. Normally – they seek low cost 2 men and a van service. These are companies that delivery all types of freight – mostly general freight.
Costs are lower but they don’t really have control.
A Bill Of Lading is a temporary ownership document. You consign your asset to another under the terms and conditions of their bill of lading. Full disclose that a load has been assigned to a 3rd party is rarely clear. It should be every time.
Clearly - safer shipping, shipment control, a reasonable quality process – can only be provided by asset based resources.
Most experienced traffic and purchasing managers have – over time – concluded that brokers have a niche. That niche is not for shipping high value or sensitive commodities. Brokers providing lowest cost / back haul rates should be used for non fragile commodities or situations where your customer relies on a controlled professional delivery.
Many brokers provide excellent customer service – they sincerely want to provide the best service they can. The issue is that they don’t really control much of anything except their customers perception.
There are laws and insurance coverage that mandate full disclosure. Take a step back - do you really understand the topic. Are you delegating to a source that pretends to have control. When you file a claim with a broker - you are filing with a hauler you don't know. You don't have leverage for negotiated business decisions to file a claim that might have some relatively minor flaw. Was there an initial inventory detailing any issues. Usually they just sign for piece count. Same thing applies at destination - was there reasonable documentation about shortage or damage. Does a broker have access to the party that caused the damage. Your brokers insurance only protects the broker - not you or your products being shipped.
Brokers are selling other peoples asset based services. They cannot control how that asset based company manages their assets.
Recommendation-
It is responsible to strongly consider asset based resources.
Asset Based Logistics vs. Non-Asset Based Logistics
Like most industries supported by service providers, the logistics and supply chain fields are made up of a wide range of providers who execute logistics functions and services in a variety of ways. Most l ogistics service provider generally can be divided into two broad categories: asset and non-asset based logistics providers. In general, both providers work to manage their clients’ supply chains and logistics departments in a manner that will:Increase overall efficiencyCut costs both hard costs (freight rates, claims, accounting) and soft costs (time, resources, smarter business decisions through visibility)Decrease errors and mitigate riskAnd accomplish these on timeThe differences between asset and non-asset based logistics firms become apparent when analyzing their methods of achieving these goals.
The following will provide a definition of each 3PL classification and how they utilize different methods to develop supply chain solutions.
What is an Asset Based Logistics Service Provider
An asset-based logistics provider owns many or all of the assets necessary to run a client’s supply chain. These assets include trucks, warehouses and distribution centers, among others. When considering an asset-based logistics provider, look for evidence that they have demonstrated the effective use of their assets to cut cost in previous client’s logistics operations.
A well-established asset based 3PL should be able to provide documentation that knowledge of their assets’ strengths and vulnerabilities has allowed them to lower the expense of moving and storing goods for their clients.
Asset based logistics providers, however, can sometimes realize a conflict of interest when developing supply chain and logistics solutions. Since this type of 3PL has made significant investments in their physical assets, they are tethered to those assets when devising ways to manage your logistics.
Consequently, asset based providers may route your supply chain through their own network in order to realize continued value from their assets, even if this may not be the most cost-effective or efficient way to manage your supply chain. Furthermore, when it comes time for a freight claim, there arises further conflict of interest (but more on that tomorrow).
What is a Non-Asset Based Logistics Service Provider - A non-asset based logistics service provider does not own the assets necessary to manage and implement a supply chain. Instead, a non-asset based provider offers its expertise in negotiating contracts with carriers, maintaining carrier relationship management programs, warehouses, and distribution centers in order to manage your supply chain at the lowest possible cost to your business.
A non-asset based logistics provider realizes that every client has different priorities for their logistics operations, and since they do not need to utilize an inventory of assets to remain profitable, non-asset based third party logistics companies exhibit a flexibility in supply chain solutions that asset based logistics providers do not.When considering a non-asset based logistics company, remember that you will be working closely with the 3PL to create a custom logistics plan that will work best for your companies needs, but the execution will be up to the provider. Therefore, you will have time to focus on your core goals and the values that your business was built on, while they focus on running your supply chain. A transparent and efficient logistics system will relieve you of burdensome supply chain obligations, allowing you to do what you do best — focus on your core competencies.Furthermore, some non-asset based logistics provider will also provide a soft asset, such as a transportation management system software to aid you in your ability to procure transportation, which is agnostic to carriers or the mode of transportation you choose.
Choosing the Right Type of Logistics Service Provider
It is important to remember that when considering a logistics service provider, you are ultimately evaluating the quality of the relationship that you will be acquiring with a true business partner. The efficiency of your supply chain has a direct effect on the reputation and dependability of your business, and it should not be entrusted to just any provider with a low-ball price.Tomorrow, follow and read along as I explore the advantages and disadvantages a little more specifically of non-asset based logistics vs asset based logistics.