When shippers search for the right carrier to transport their goods, price is often just one of their considerations, according to industry experts and trucking executives. Equally important, they say is a fleet’s ability to provide services such as warehouse management, just-in-time delivery and the use of third-party logistics operations, among others.
“Some shippers have an outside logistics person in their warehouse. That’s a big change in the transportation function from what it was 10 or 20 years ago,” said Peter Gatti, executive vice president of the National Industrial Transportation League, Arlington, Va. “You see the [package-delivery companies] operating as [logistics] functionaries within the customers’ facilities.”
A big advantage in using 3PLs is their combined, multi-customer volumes give them transportation pricing leverage, Gatti said.
Chris Burroughs, a spokesman for the Transportation Intermediaries Association, Alexandria, Va., cited another reason for using 3PLs: “Access to equipment fleets that [carriers] might not otherwise have the time and resources to find themselves. With thousands of fleets to draw from, a good broker can provide more equipment and different modes of transportation much faster than a single carrier.”
He also said, “Efficiency and costs are the criteria you look at when choosing a 3PL – the quality of service and the cost of that service.”
Specific services that best suit a shipper “can vary with the supply chain that you have,” Burroughs said. Whether a shipper or receiver requires just-in-time delivery or uses a warehouse can be a major factor, he added.
Carriers also said that whatever services shippers require should be tailored to the needs of both parties and provide some degree of predictability for customers and fleets.
“Never develop a price and service solution until you clearly understand what the customer needs. Ask customers directly, ‘How often would you like to see us?’” said Geoff Muessig, chief marketing officer and executive vice president of Pitt Ohio, which ranks No. 65 on the Transport Topics Top 100 list of for-hire carriers in the United States and Canada.
“A lot depends on where you are in the sales cycle,” Muessig said. “If something has changed with [the customer] or if something has changed with us, it’s time to sit down and have a conversation” about those changes.
Tailoring a transportation or logistics service package isn’t always easy because forecasting cargo flow is difficult for some shippers, especially in the agricultural sector.
“The volatility of our supply is really interesting,” said John Pandol, director of special projects for Pandol Bros., a Delano, Calif.-based grower of table grapes and stone fruits. Predictability, of course, would make life easier, but “Mother Nature just doesn’t work that way,” he said.
About 90% of Pandol Bros.’ volume “is contracted by the buy side through third parties or the transportation division of supermarket,” he said. For the remaining 10%, the company deals mostly on the spot market with refrigerated truck brokers, he said.
Pandol Bros. has one “fairly stable” account involving a forward distributor that holds product for delivery to its own customers, who want “daily deliveries of fairly small amounts,” Pandol said.