Carrier selection is a difficult process – or at least it can be. In today’s market, many companies maintain a strong core group, lean on an extended network, and rarely allow in new providers. Their network may be entirely asset-based providers, only brokers or logistics service providers (LSPs), or some mix. How does a company decide the right mix? And once that is decided, how do they choose among the hundreds of thousands of available partners? Luckily, FourKites has made grading carriers a little bit easier.
Before deregulation in the 1980s, domestic freight moved based on tariffs – regardless of carrier quality, there was a set cost based on the key shipment factors. Deregulation prompted the competitive market we see today, which has driven more efficient supply chains and typically lower costs for shippers and consumers. These changes also expanded access to available capacity. Shippers have a choice: use company trucks, move freight through outside trucking companies, partner with third party logistics providers (3PLs), or even hand decision making to 4th party logistics providers (4PLs). Making the right choice can be messy based on internal needs, and is highly subjective.
Major factors in carrier selection
All carriers strive to provide quality service, but they do not all operate under the same levels of expertise and execution. A carrier or logistics provider will offer unique value based on company size, technology, equipment quality and personnel. Here are the 6 key, differentiating factors in the selection process:
- Coverage – The ability to move the shipments in question is the obvious and critical first step in a selection process. If there are unique requirements to your supply chain (regional specificity, high value, multimodal, hazmat etc.), these take precedence over some of the other factors below. Especially in our current market, finding carriers that can cover the freight you need is the most important.
- Performance – Execution to the standards needed (OTIF, as an example) can vary significantly based on your customers. The best way to identify carriers that perform to the standards necessary are through objective resources, references, and trials.
- Price – Costs to move your freight are often relative to the market and impacted by the factors mentioned above. If your freight is consistent, you can draw up contractual partnerships to take seasonality out of your equation. Expect higher rates as requirements increase and the capacity pool shrinks. Price doesn’t always correlate with these other factors, and the lowest cost carrier may not impact coverage and performance.
- Communication – The right carrier partner can create ease and ability to manage updates, exceptions, etc. as a value-add to your business. Carriers should leverage the technology at their disposal to offer automated tracking, fast responses, and proactive efforts if and when an issue arises. Not every shipment goes perfectly, so having strong collaboration is key to overcoming any obstacles.
- Risk – Insurance coverage, safety history, operating status, and inspection history can impact the carrier’s ability to keep their wheels turning and your freight moving. You can (and should) understand much of their history from their USDOT safety page.
- Terms – Payment, documentation, and other ancillary provisions that may be unique and beneficial to your business can play a hidden role in your selection process. Not every carrier partner is ready to play ball the way you prefer. If you have a protocol that is unusual, longer days to pay, or need drivers to follow a particular technology flow, that might need to be considered.
Qualifying good performance
It is very hard to objectively assess these 5 factors when going through the carrier selection process. There will never be one exhaustive consortium to reference. FourKites core focus aligns with our core competency: visibility. Which means that we track and enable coverage, performance and communication, and we partner with leading companies like DAT, Narvar, and your TMS provider to help you make the right capacity decisions, regardless of the need.
FourKites compiles carrier tracking quality metrics based on more than 2.8 million+ shipments per day, delivers scorecards based on carrier performance and dynamic supply chain insights, and promotes leading carriers in our quarterly Premier Carrier List. With strategic focus around sustainability, we also highlight those who participate in the government SmartWay program, and provide a sustainability dashboard for effective planning as well. Premier Carriers embody the exemplary execution so many pursue. They represent dedication to consistent tracking, which in turn reduces dwell times, improves ETAs, and strengthens your end customer relationships. The FourKites Carrier Operations team works hand-in-hand with thousands of carriers to strengthen their quarterly performance, and as a result this list grows each quarter.
Commitment to your success
Our goal is to provide innovative solutions through visibility into global supply chains. As the FourKites carrier community prepares for its largest growth ever in 2022, our focus will be to create a network of top quality transportation companies so that shippers and LSPs can better qualify their relationships.
