Asset vs Non Asset Based Logistics Companies
Here at C&D Logistics we’re occasionally asked if we are an asset-based company, so we’d like to take this opportunity to dispel a few common myths about asset vs non-asset based freight companies.
Some shippers prefer that the freight companies they deal with own assets. Although the reason for this might be as simple as the shipper not entirely understanding the world of third party logistics, we’d like to show how non-asset based 3PL companies can be a valuable ASSET to almost any company.
What is an asset-based carrier?
Myth #1: Non Asset Based freight brokers don’t have direct access to trucks
It’s often thought that if a freight broker is non-asset based they won’t have direct access to trucks, but this couldn’t be further from the truth. Most freight brokers have access to thousands of trucks through carrier partnerships. This may come as a surprise to some shippers, but for some non-asset based companies the network of trucks is typically much larger and more flexible than even the largest asset based carriers. An example of this is when a trucking company owns 60 trucks versus a broker with 5,000 carriers averaging 10 trucks each – it’s quite obvious the broker has more capacity to assist his customer in moving their freight because they are able to cast a larger net.
Myth #2: Non-Asset Based Freight Brokers Are Not Cost Effective
Some shippers have the belief that non-asset based freight brokers cannot be competitive when it comes to pricing. They may think if you remove the broker from the transaction it will result in lower pricing for the shipper, but that line of thought is not completely accurate. We all know there is power is in numbers, and as a result of a freight broker’s large volume in a given lane they may be able to leverage the volume they have and negotiate better pricing. Another equally important fact is that freight brokers often re-position asset-based carriers, resulting in less empty miles and more profit retention for their asset-based partners. No carrier wants to run empty, and back-hauls are done at a highly discounted rate to allow brokers to pass along competitive rates.
5 benefits of third-party logistics.
Myth #3: Non-Asset Freight Brokers Have Less Control Than Asset Based
Some shippers may assume if a broker doesn’t own assets they will have no control over the pick-up to delivery shipping process, but most legitimate freight brokers require their asset-based carriers to comply with strict company policies as they relate to compliance and performance. Here at C&D Logistics, we perform strong due diligence on all carriers prior to entering into a relationship with them. Take experienced brokers as an example – they require carriers to meet the highest safety standards as well as ensuring all of their carriers have an active transportation authority and are properly insured. The best freight brokers also monitor their carrier’s service performance including on-time pickup & delivery, freight claims, and customer complaints. If service falls below a specific level, carriers are cut off to prevent any future issues.
We know some shippers or companies are reluctant to use non-asset based freight brokers. Maybe that’s due to a bad experience or just simply fear of the unknown, but we’ve learned over our years in this industry that there is a small group of shippers who do not have a clear understanding of how legitimate freight brokers work. They may have even been misinformed, and that’s what’s causing them to shy away from non-asset based 3rd party brokers.
What are the differences between shipping and logistics?
Now that we’ve dispelled with the myths, here are the facts:
Freight brokers play a strong and growing role in the world of freight and logistics, and they will continue to play a vital role in the future. The good news is that more and more shippers are using non-asset based freight brokers, so the overall perception is rapidly changing.
If you have questions about asset and non-asset based freight companies, we’ve got your answers. Give C&D Logistics a call at 604.881.4440 or visit our shipping page.