Selecting a carrier to ship with is a challenging decision for many managers. A shipping partner will have a significant impact on the operations of the corporation. It is important for managers to evaluate a carrier provider to choose the most suitable one for shipping process.
To assist managers with the evaluation process, we have created a guideline that evaluate carrier provider against objective criteria. Based on your business needs, you will be able to determine the most important criteria to follow and choose the best provider.
1. Carrier and its types
A carrier is a company that provides air, sea or land transportation services. There are two main types of carriers: private and for-hire. A private carrier will provide services for the company or industry that owns or leases the vehicles and do not charge a fee outside of the service provider’s incurred costs. On the other hand, a For-hire carrier will provide services to the general public, charge a fee and are typically subject to governmental regulations on rates, routes and markets served.
Private carriers: a group that provides transportation exclusively within an organization. Private fleets can be used to backhaul freight from the supplier, which reduces the fleet’s overall operating costs. The majority of private transportation involves motor carriers, which can double as advertising, operating as “rolling billboards” as they drive.
Common carriers: transportation available to the public that does not provide special treatment to any one party. Common carriers is regulated as to the rates charged, the liability assumed and the service provided.
Contract carriers: a carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract. They are not under any obligation to provide services to the general public and only have to serve contracted customers.
Exempt carriers: a for-hire carrier that is free from economic regulation. They are not restricted in terms of routes, area served or rates. Their exemption status is determined by the type of products being transported and the nature of the operation.
Non Vessel Owning Common Carrier (NVOCC): NVOCC operation comprises of sales, stuffing and transport of the containers to gateway ports. The bill of lading issue and overseas distribution is taken care of by the agents of NVOCC.
2. Factors to consider when evaluating a Carrier
a. Cost and quality
Pricing is a determining factor when choosing a carrier and is usually among the first inquires carrier provider will receive. Along with service fee, a company will check for the service quality provided by its potential partner. Together with time factor, these factors can help managers reduce the risk when selecting a suitable carrier for the company.
b. Transit time and reliability
A carrier provider should be selected on the basis of documented performance relative to speed and reliability. Your business depends on the timely arrival of your freight to the right destinations. A reliable carrier will contribute to your company’s positive reputation and as a result, grow your business by meeting your customer expectations. Choosing a carrier with transparency in communication is also very important. It keeps the carrier responsible for the load and you will always be well-aware of your shipment’s status.
c. Equipment availability and capacity
Carrier under consideration must have sufficient capacity to serve transportation needs. Ask the question, what transportation services does the carrier provide? Will these services serve your company’s requirements? Carriers must have the necessary equipment and manpower, as well as the ability to secure capacity for the freight shipment.
d. Geographic coverage
It is also crucial to select a logistics provider which can provide service in the route your freight will travel with the required frequency. Both current and anticipated requirements should be considered, if the company aims to establish a long-term and profitable relationship for all parties.
e. Product protection
Safety means a lot to a company as well as its customers. A carrier provider with a lower accident rate and higher service fee is still much better than one with lower service fee but much higher accident rate. In the worse case of accident, the provider’s communication protocols for the situation must follow the organization’s standard. A carrier that prioritizes safety can help the company build a stable reputation, which eventually leads to increased sales.
f. Carrier stability and sustainability
A stable carrier in the marketplace will guarantee the continued service of your company’s transportation needs. In the long run, the company will benefit more when having an agreement with a stable position in the market and sustainable growth.
In the trend for the 21st century, the carrier should follow sustainable practices and are environmentally conscious. Customers nowadays have a tendency to choose an environmentally friendly company between 2 reputed one.
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