You don’t have to think about carrier logistics when you're a consumer. You simply order a product, and it magically shows up at your door.
However, when you’re a business owner, carrier logistics suddenly becomes extremely important as it can make or break your business. Here’s what you need to know:
Why Is Carrier Logistics Important to Your Company?
Carrier logistics is often an afterthought. However, it’s actually a critical component of your business. After all, it doesn’t matter how great your products are if you can’t get them to your customers safely and quickly.
Unless you’re going to transport your products yourself physically, you’re going to need to work with carriers to ensure the safe and efficient transport of your products.
What Does a Carrier Do?
A carrier handles the transportation of goods from one place to another. Goods can be transported by sea, air, rail, or road. However, most, if not all, goods will end up being transported over the road at one point or another.
As a result, road transportation tends to be the most important and most intricate shipping method. Thankfully, a reputable carrier can effectively handle these complexities and simplify the overall shipping process from beginning to end.
What Is the Difference Between a Freight Broker and a 3PL Company?
Freight brokers and 3PL companies may look the same at first glance. However, they play different roles in the shipping process.
What Is a Freight Broker?
A freight broker acts as the middleman between shippers and carriers. They work with shippers to find a carrier that can actually transport the load.
While they don’t actually own any equipment, they handle the details of the shipment, including paperwork and communication, to make the process quick and painless.
Some advantages of working with a freight broker include:
- Gaining access to an extensive and diverse network of carriers available to meet your shipping volumes and time frames
- Easier to scale your business since you have access to a greater number of carriers to ship your goods
- Saving money since you don’t have to manage your shipping processes and equipment entirely in-house
Some disadvantages of working with a freight broker include:
- Not all freight brokers are created equal. It’s important to research the best freight brokers to ensure they’re reputable and dependable
What Is a 3PL Company?
A third-party logistics or 3PL company handles much more than just the shipping process. These companies handle everything from product storage to product packaging. 3PL companies work with companies on a long-term basis and work to gather and analyze data to optimize processes.
Some advantages of working with a 3PL company include:
- 3PL companies take logistics out of your hands, allowing you to focus on other components of your business
- 3PL companies can help you grow your business by handling details that would be challenging to manage on your own
- 3PL companies can save you money by handling a wide range of different services — essentially providing you a bulk discount
Some disadvantages of working with a 3PL company include:
- 3PL companies may offer more services than you need, and as a result, can end up costing more
What’s the Difference Between the Two and Which One Is Best?
As you can see, a freight broker handles shipping alone, whereas a 3PL handles shipping and more. If you’re looking to help solely with transportation, then a freight broker should be able to meet your needs.
However, if you’re looking for help with several different logistics processes, then you should consider a 3PL.
What Are the Two Types of Carriers?
There are two main types of carriers: Common carriers and private carriers. Here’s what you need to know about each of them:
Common Carriers
A common carrier is a private or public company that transports goods or people. A common carrier offers its services to the general public or other businesses and must work with anyone so long as they’re willing to pay for the service.
In most cases, businesses like taxi services, trucking companies, vehicle towing services, rail freight services, air freight services, and couriers are common carriers. Interestingly enough, telecommunications services are also classified as common carriers according to U.S. law.
Examples of common carriers that transport people include bus companies like Greyhound and Megabus. Examples of common carriers that transport goods include freight companies like RPM.
Private Carriers
On the other hand, a private carrier is a company that does not transport goods as its primary business. Instead, it owns vehicles and uses them to transport goods rather than contracting out to common carriers. Simply put, you’re not able to hire a private carrier.
Compare and Contrast
So, how does a company choose between contracting out to a common carrier or operating its private carriers? It depends on the company’s structure, volume, and priorities. Companies that ship high volumes of goods may find owning and operating a private fleet more worthwhile than contracting out its loads.
That’s not to say that it’s cheap to own and operate a dedicated fleet — in reality, it’s quite the opposite. The company is responsible for purchasing the trucks and trailers, hiring drivers, purchasing insurance, and performing regular maintenance with private carriers. So, not only is the initial cost high but so are long-term costs.
On the other hand, companies that ship lower volumes of goods tend to go with common carriers to minimize costs. Working with a common carrier is also ideal if you ship a wide variety of goods requiring different shipping types.
Many companies take a hybrid approach to common and private carriers. With a hybrid approach, companies maintain a certain number of private carriers and contract common carriers as needed. One example of the hybrid approach would be when a company outsources to common carriers only when they have increased demand and shipping needs.
This hybrid approach allows companies to take advantage of the benefits of each model, with the overall goal of minimizing shipping costs.
How To Tell the Difference
Now that you know a bit more about common carriers and private carriers, you’re probably wondering how you can tell the difference when you’re on the road. It’s not always obvious whether a truck operates as a private carrier or a public carrier if you don’t know what to look for.
A dead giveaway for a private carrier is using large company logos on the trailer. For example, you might see trucks with “Target” or “Walmart” emblazoned on the side. Those are private carriers since the company owns and operates those vehicles for the sole transport of its goods.
Common carriers are usually plainer in appearance since they’re not owned by a business looking for free advertising. Instead, common carriers might feature the transport company's logo since they ship day-to-day is constantly changing.
How Does a Logistics Carrier Determine Its Rates
A logistics carrier determines its rates based on a whole host of different constantly changing factors. As a result, it’s often challenging to estimate shipping costs ahead of time.
Here are some of the different factors that logistics carriers use to determine rates so that you can gain a better understanding of how the pricing system works:
Transportation Mode
Perhaps the most critical factor involved in calculating shipping costs is the mode of transportation. When shipping goods over the road, there are several different types of trailers to choose from depending on what you’re shipping. Some of the most common trailers include dry vans, flatbeds, and reefers. However, there are also hoppers, dump trucks, and bulk containers.
Dry vans are ideal for shipping many different goods as they are entirely enclosed and offer protection from the elements. Flatbeds are suitable for shipping oversized goods that don’t necessarily need protection from the elements. Finally, reefers are ideal for shipping temperature-sensitive goods, including food items and pharmaceutical products.
Since dry vans are the most common type of trailer, they are usually the cheapest mode of transportation. Reefer shipping may cost a bit more since these trucks are more expensive to run and maintain. The cost of flatbed shipping tends to fall somewhere in between dry van and reefer shipping.
Season
The year also affects carrier rates as you can expect to pay more during peak shipping season due to increased demand. Peak shipping season usually runs from August to October due to the beginning of the school year and numerous holidays.
So if you’re trying to ship something in September, expect to pay a premium rate. On the other hand, if you’re trying to ship something in February, you’re likely to receive a better rate.
Distance
Distance understandably plays a role in determining carrier shipping rates. Generally speaking, the longer the shipping distance, the higher the shipping cost. However, there are often more factors in play than just distance alone.
Origin and Destination
Shipping origin and destination can have a considerable impact on carrier shipping rates. You might be able to get a better rate if the demand for carriers in your destination is high or the supply is low. However, you might have to pay a premium price to ship to a destination where there are a lot of carriers but not a whole lot of demand.
Fuel
Fuel is another important aspect of shipping carrier rates. As you might expect, fuel is closely tied to distance — but it’s also tied to other factors like origin, destination, and even season. Fuel prices are generally higher in the summer and higher in specific locations.
For example, the cost of a gallon of diesel fuel in California right now is $4.85 but is only $3.31 in Oklahoma. The states with the most expensive gas are California, Hawaii, Washington, Oregon, and Pennsylvania. The states with the cheapest gas are Oklahoma, Mississippi, Missouri, Texas, and Louisiana.
Weight
Carriers also consider the weight of your shipment when determining your shipping costs. Heavier shipments will cost more than lighter shipments. In addition to weight, carriers also consider density. The more space your load takes up in the trailer, the more expensive it’s going to be.
Shipping Speed
The final factor that determines carrier shipping rates is the speed of the shipment. If you need expedited delivery, you can expect to pay a premium for this service. However, if your timeline is more flexible, you can expect a better rate.
How to Get the Best Rate
Shipping costs tend to vary from carrier to carrier. As a result, it’s always a good idea to shop around and get quotes from several carriers to ensure that you’re getting the best deal possible. That being said, you tend to get what you pay for with logistics carriers. Sometimes, it makes sense to pay more to work with a trustworthy carrier.
But how can you find a reputable carrier? The best way is to ask around or look online. Just make sure to check the reviews and registration status of any carrier you’re considering before you make your decision based on price alone.
Conclusion
RPM has a 40,000+ carrier network that can move thousands of vehicles a month.
Contact a logistics expert today to receive a quote for your shipment.
Sources:
Guide to 3PL Logistics | Business News Daily
Common Carrier Definition | Investopedia
State Gas Price Averages | AAA
