Q: Third-party logistics (3PL) companies face many challenges with each shipment they manage. Why is it critical for 3PLs to take control of their shipments?
A: In today's difficult economy, shippers look for efficiencies such as maintaining smaller inventories and scheduling employees to unload freight at key consumption and/or distribution times. This demand only increases the importance of on-time deliveries.
All 3PLs know that when you put a person, a truck, and Mother Nature together, many things can go wrong. Today's 3PLs must think and operate differently than yesterday's brokers did. They need to influence all aspects of the shipping process.
Q: What can a 3PL company do to gain more control through today's technology?
A: Web-based load boards such as Internet Truckstop and TransCore allow 3PLs to access real-time carrier information through their Federal Motor Carrier Safety Administration-issued Motor Carrier Number. 3PLs can check the driver's insurance, authority, driving records, and CSA 2010 scores to grade drivers quickly, and better manage safe and on-time deliveries.
They can also communicate with drivers through smartphone apps such as MacroPoint, which is similar to a GPS system, and can easily track drivers to provide the same level of oversight as a company that owns its trucks.
Q: How does a 3PL's insurance coverage factor in?
A: All 3PLs must decide whether to use contingent cargo insurance or primary cargo insurance. Contingent costs less than primary, which is a factor for some companies. Primary cargo insurance, however, demonstrates willingness to take direct responsibility over shipments, which instills customer confidence. Depending on the shipper the 3PL is working with, it can be the deciding factor in getting a load or not. In the long run, the additional expense of primary insurance is worth it because it demonstrates greater commitment to customers.
Q: How will investing in greater shipment oversight benefit your 3PL company over time?
A: 3PLs can set themselves apart from other providers by taking as many steps as possible to show shippers a higher level of responsibility over their freight. You can't just be a broker today. You must be able to accurately track shipments, know contract carriers and their drivers well enough to completely trust them, and take responsibility for every job.
Not every company can implement all of these processes at one time, but 3PLs can take small steps along the way to inspire shipper confidence.