Partnering with the Right Freight Carrier: Reducing Risk Through Smart Collaboration

Delays

Delays are difficult to completely eliminate from your transportation equation, due to the inherently unpredictable nature of motor vehicles, the supply chain, and weather. With proper capacity and redundancy, however, delays can be mitigated significantly.

Thus, it’s fair to look at a carrier’s on-time delivery percentage as a key metric of its performance, and the most direct indicator of carrier reliability. If a carrier cannot tell you their on-time percentage, they should be eliminated from consideration, except in emergency situations.

Delays affect your bottom line in two important ways: in the short term as additional charges, and in the long run as reputational damage.

Increasingly, consignees employ supplier scorecards to rate their partners on a variety of factors including On-Time In-Full (OTIF) delivery. Even if fees are not incurred on a late delivery, expect missed shipping deadlines to be noted, and factored in when your customers periodically evaluate their business practices.

Damage

Freight damage is one of the most frustrating issues shippers face.

Not only is it expensive, but establishing responsibility can be a fraught process. Merchandise that is damaged en route is costly to either the consignee, the shipper, or both.

Again, reputational damage is accrued in addition to monetary cost. While inadequate packaging can be an issue, improper handling and accidents are more common. If damage occurs, you deserve a candid and transparent response from any carrier you work with. In addition, there should be a clear path to resolve any dispute.

Compliance

Compliance issues break down into two broad categories.

• Carrier-side issues include things such as complying with hours-of-service regulations, maintaining accurate maintenance logs, as well as customs procedures and other regulatory factors. 

• Shipper-facing issues include shipment violations regarding delivery windows, as well as disputes over loading and unloading agreements that may differ from consignee to consignee. 

Violating agreements, industry regulations, or contracts can disrupt shipments and result in costly fines, fees, and unnecessary logistical overhead.

Regardless of where compliance issues sit, it is imperative that any carrier you work with have a comprehensive understanding of the issues, as well as experience in mitigating or eliminating them. 

Unexpected Costs

While all carriers will quote a price up front for a given shipment along a given route, that quote is only useful if it considers any additional fees, fines, and costs associated with delayed freight, damaged goods, and compliance issues, all of which are typically applied on the back end of the shipping process.

These factors have been known to inflate costs significantly. These unexpected fees can have a significant impact on the overall profitability of your product. 

Inaccurate shipment information, such as weight, classification, or dimensions, could also lead to a different freight rate than what was initially quoted. Investing in tools to accurately measure your freight can mitigate re-weigh or re-classification of your shipment.

Unexpected costs are one of the greatest sources of friction in shipper/carrier relationships. The antidote to the negative impacts of these costs is a strong, transparent relationship with your carrier. Potential back-end charges and their likelihood should be an open topic from the word go, and both sides should be ready and willing to collaborate on solutions.

Selecting the right carrier for your shipping needs is not a decision that should be undertaken lightly. Ideally, these relationships are built for the long haul. Changing carriers has significant organizational cost and means starting over from scratch in many ways, so it should be avoided where possible.

There are several key factors to consider when choosing a transportation partner.

Reliability and Reputation

On-time delivery is one of the best overall indicators of a carrier’s operational excellence. Mastering the ability to consistently make deliveries on time over tens of thousands of shipments per year tests a host of organizational, logistical, and operational faculties.

It’s reasonable to inquire about metrics with representatives of any carrier you are considering, but it’s also important not to rely solely on a company’s opinion of itself. Testimonials, overall time in business, historical performance data, and third-party evaluations are all useful tools in sizing up potential transportation partners. Mastio & Company conducts an annual study and report on LTL carriers in the US, evaluating each on a list of 28 key attributes.

Coverage and Capacity

One factor to consider is whether a given carrier adequately serves the lanes you need to ship in. However, if your business intends to expand, you want to make sure you are working with a carrier that operates in the areas you intend to expand into. If you think you may need coast-to-coast coverage down the line, you can avoid the hassle and overhead that comes with switching carriers by working with a nationwide transportation partner off the bat.

When looking at coverage, make sure you also consider capacity. The amount of territory a carrier covers only matters if they have the capacity to not only move freight across that territory, but to do it despite unexpected situations, inclement weather, or last-minute changes.

Excess capacity is the solution to all of these problems. Don’t just ask whether a carrier can cover your routes, ask what happens when your shipment volume increases suddenly. Can the carrier handle seasonality in your business? It’s important to partner with an LTL carrier that consistently invests in building capacity in the areas of service centers, equipment, employees, and technology. 

If you need to move goods to or from Canada or Mexico, you will find that different carriers have different comfort levels with these lanes, which require additional regulatory and compliance factors. Some carriers are able to coordinate transoceanic services that dovetail with your domestic needs.

If you regularly need to ship within tight time-windows, you may want to consider a carrier with specialized services, such as expedited, guaranteed delivery.

In all of these more complex cases, experience should be one of your primary considerations.

Technology and Communication

It should be easy to communicate with representatives from your transportation partner, in whichever format your prefer. 

Digital back-end systems can speak to each other directly and automatically through application program interfaces (APIs). Real-time tracking via electronic communication networks and Internet of Things (IoT) technologies is also becoming standard. Knowing where your shipments are, when they are due to arrive, and the ability to alter their destination while in transit, is another critical functionality your LTL carrier should have.

If you are already operating digitally, make sure any transportation partner you consider working with has the technology stack to accommodate your most advanced needs. If you are still evolving your digital strategy, make sure you are working with a partner who has the resources to help you make the transition smoothly, and at the lowest possible cost. 

Strong Communications to Build Trust

Trust is built in many ways, including dependability, time of relationship, transparency in business dealings, and open, proactive communications. The ability to have open dialogue is essential for the success of any transportation relationship.

Shared Data and Harmonized Technology

In the modern era, shipping is almost as much about moving bits as it is about moving atoms. The more data shippers and carriers can share with one another, the greater their ability to optimize routes, loads, and schedules, all of which can have a positive effect on price.

It’s critical that the data is accurate. Inaccurate shipment data, such as the wrong weight, dimensions, or classification, can result in a different freight rate than what was initially agreed upon. Accurate data enables accurate pricing, which eliminates surprises on your final invoice.

Ongoing Evaluation and Adaptation 

Evaluating shipping partners is not something you do once and forget about. It’s critical to create a cadence for evaluating the relationship over time.

Ideally, you want to enlist your transportation partner in the process to make sure you are both incorporating all available information as you make ongoing adjustments. The goal is not to make your next quarter match your last, but to exceed it. Conversely, in the transportation business we know we’re only as good as our last on-time delivery.