In this article, learn about:
How to start searching for a logistics provider
The key factors that impact your selection
Common mistakes to avoid when choosing a freight partner
In its simplest terms, a freight carrier is a party that carries your goods from point A to point B. Truck freight, also known as over-the-road (OTR) freight, is the most common type of transport in the continental United States, accounting for nearly 40% of freight movement.
Some suppliers, particularly large ones like Tyson or Coca-Cola, manage their own fleet of trucks and drivers to transport products. But for most suppliers, especially small to mid-size ones, it’s more practical and cost-effective to contract a freight carrier.
Choosing the right OTR carrier for your business is a crucial decision that affects your efficiency, your profits, and even your compliance with retailer’s standards.
Where to Start When Selecting a Freight Carrier
There’s no need to start from scratch when looking for a freight carrier. Here are a few ways you can jumpstart your search:
See if Your Retailer has Preferred Partners
Many retailers maintain a list of preferred or approved freight carriers. A big benefit of working with these providers is their experience with the specific retailer you’re shipping to. You can expect a preferred carrier to have a better understanding of the retailer’s specific compliance guidelines, delivery windows, shipping documentation, etc. Working with a preferred carrier may also reduce your chances of routing or delivery issues.
For example, Walmart Marketplace has a set of preferred carriers available to its sellers via the Walmart Preferred Carrier (WPC) Program. Walmart says sellers who utilize this program can enjoy reduced costs, easier carrier management, and convenient billing; this is just one example of how choosing a recommended carrier can streamline your operations. If your retailer doesn’t have a preferred carrier list readily available, consider reaching out to your buyer or point of contact to check for recommendations.
Search for Third-Party Logistics Providers
Third-party logistics (3PL) providers offer a wide range of supply chain services. This is a great option if your business does not have the capacity to manage logistics in-house. Depending on the provider you pick, they may offer services like:
Freight transportation
Warehousing
Inventory management
Order picking and packing
Processing returns
Real-time shipment tracking
Tip: If you’re unsure where to start when looking for a 3PL, search for one with experience in your product category.
Related Reading: Advantages of Hiring a Third-Party Logistics Company (3PL)
Utilize a Freight Broker
Freight brokers serve as an intermediary between a shipper and a freight carrier. Although a broker is a third-party and performs some of the functions of a 3PL, they are more limited in their scope of services. A freight broker, in contrast to a 3PL, never takes possession of your shipments. Instead, they simply coordinate the process of moving the freight from the shipper to the carrier.
This method can be a good option for suppliers who don’t want to fully outsource their logistics. A broker may be the only service a supplier requires if its internal team is equipped to manage its inventory, picking, packing, etc.
Freight brokers may also offer reduced rates. Because they work with such a large volume of shippers, they may be able to negotiate better terms with freight carriers, which can reduce their customers’ costs.
Get Referrals from Your Network
With so many logistics providers to choose from, it can be overwhelming to narrow down your options. One great way to do so is by utilizing your professional network. If you have contacts within your industry, especially if they ship to the same retailers as you, they can be a great source of insight. They can likely tell you which carriers/providers have excelled or fallen short of standards, helping you avoid making a costly choice.
What to Consider When Picking a Carrier
Once you decide what type of carrier service to pick, it’s crucial to evaluate their services fully to ensure what they offer best meets your needs. Make sure to take into consideration the following:
1. Capabilities
Before entering a partnership with a carrier, it’s important to make sure they have the infrastructure and capabilities to meet your company’s needs. For example:
Is the carrier familiar with your product category? By contracting a carrier that has experience with your product category, you can lean on their expertise. This is especially helpful if you’re shipping goods with specific requirements, like refrigeration or hazardous material handling.
Is the carrier fully insured and compliant with the industry regulations? If a carrier lacks adequate insurance or does not follow industry regulations, it can put your supply chain operations and reputation at risk.
Does the carrier offer extra services your business may require? This may include things like liftgate services, return merchandise handling, warehousing, etc.
2. Communication
Communication is key in any business partnership, but especially so when you’re trusting another company to move your freight and meet delivery expectations. Before contracting with a transportation provider, consider:
Tracking features: Do they offer end-to-end visibility into shipments, from pickup to delivery? Real-time tracking can help you anticipate delays and keep customers informed.
EDI capabilities: Do they support Electronic Data Interchange (EDI) transactions? These transactions are common (and often required) when working with retailers.
Responsiveness: Is the communication prompt and helpful when concerns and issues are raised?
Customer service: Is everything automated? Can you receive quick responses from a chatbot as well as get in contact with a human when needed?
Related Reading: What Is EDI (Electronic Data Interchange)?
3. Reputation
A logistics provider’s reputation and reviews are a critical piece of information when making your decision. Although the company may have a convincing sales pitch, its customer reviews will help you understand if the company:
Fulfills their promises
Has prompt and helpful customer service
Addresses issues/complaints
The Better Business Bureau, Google reviews, and Trustpilot are good starting points to look at reviews. You can also ask the provider themselves to share customer success stories, reviews, case studies, etc.
Common Mistakes to Avoid When Selecting a Carrier
Selecting any business partner is a big step, and it’s easy to make mistakes along the way. Here are some common (but avoidable) pitfalls to look out for:
Focusing only on cost: Although you don’t want to overspend on freight, picking the cheapest carrier can sometimes be more costly than cost-effective. If your shipments are plagued with delays, late arrivals, or damaged goods from poor service, you risk incurring deductions and straining your reputation with your retailers.
Not shopping around: When contracting a freight carrier, going with the first quote you receive may be the simplest option. But without comparing the costs and services with other providers, you may end up overpaying, missing out on other services, or simply choosing a partner that isn’t the best fit for your business needs.
Adopting a sunk cost fallacy: Maybe you already have a logistics partner, but they aren’t meeting your expectations or needs. It can be hard to step away from a partnership you’ve already poured resources into. But in the long term, if you’re working with a partner that is hurting your profit margins due to non-compliance, delays, or even poor communication, it’s worth looking elsewhere.