Jameson Parker
Throughout the steps of their manufacturing process, companies can maintain control over all or most of the variables that exist within an operation. This control is relinquished by most organizations, however, when it comes time to ship the finished product to a customer.
Third-party logistics account for over 90% of the shipping for Fortune 500 companies in the United States, according to research performed by Armstrong and Associates.
Realities of the modern shipping industry, including rising costs, stricter government regulation, and longer distance requirements, indicate that an increasing number of businesses will require the use of third-party carriers, ultimately contributing to the industries’ growing market size. According to Grand View Research, “The U.S. third-party logistics market size was estimated at USD 247.4 billion in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 9.2% from 2024 to 2030.”
Model Comparison
In logistics, companies generally have two main operating models – asset-based and non-asset-based.
Asset-based is a company that owns trucks, warehouses, and other resources that handle the shipping needs. The benefits of these companies include more consistent data and the ability to handle issues quickly because they are in control of the resources involved. A non-asset-based company doesn’t own the assets; rather, the company coordinates shipping through a third-party provider. The benefit of this kind of provider is that it is usually less expensive; however, resolving any issues may take longer because they have less control over the resources.
There is also a hybrid model, asset-based or non-asset-based partners that may own part of the resources and rely on third-party companies for other assets.
Choosing the right logistics partner is a matter of determining the priority for cost, speed and reliability.
As the market continues to grow, companies will be presented with an expanding list of choices for shipping partners. This will provide opportunities to develop new and improved relationships with carriers to ensure their finished product makes it to its destination on time and in proper condition. There are many factors that can define an effective logistics partner, and it is important that all are considered carefully when choosing your next carrier.
Expert Advice
Shipping managers are regularly on the front lines when dealing with carriers to ensure the handling and transportation of goods will be executed effectively. One such manager, Jeani Thomas, has overseen logistics for North American Signs based in South Bend, St. Joseph’s County, for over 10 years, and has seen her fair share of third-party carriers come and go. When asked for her advice regarding the search for an effective shipping partnership, she had a few key points of importance to highlight:
“Communication is key, and it is a must to have a good sales rep that can assist when things go awry, as they inevitably will at some point,” said Thomas. “They must be willing to jump in and sometimes go above and beyond to control a bad situation and partner with you to find solutions quickly.”
Thomas also noted that:
- Pricing is important, but equally, if not more important, are low incident rates. It is vitally important to find partners who understand this and treat our freight with care.
- In that same line of thinking, it is a must to have partners who, when all else fails, and items get damaged, are willing to correct the problem and process the claims in a timely manner.
- Lastly, find logistics partners that can and are willing to handle a variety of different-sized loads. Companies have varying shipping needs, and carriers that possess large fleets with multiple modes of shipping can be invaluable.
Other Considerations
Depending on your business and the nature of the product you are planning to ship, there are a few other considerations to keep in mind when selecting a carrier to with whom to partner, including in the areas of compliance, compatibility, and up-to-date technology. It is imperative that a shipper comply with industry regulations such as customs requirements, maintenance log requirements, and hours-of-service regulations. Enterprise-level technology is important to keep up with business demands, now and in the future. A knowledgeable IT team can help troubleshoot when issues arise.
Certifications to transport certain types of loads and international shipping capabilities may also be important considerations for your business.