Choosing the right partner in transportation is vital to guaranteeing your freight is delivered safely, efficiently, and on time. This is no small task with the various options that are available. The two main types of providers are asset-based carriers and brokers. Knowing how each differ can help you to better align with the provider, or providers, that best fit your needs.
Asset-based carriers own their own fleets. These fleets can vary in size and scope, as some have warehousing tools to both ship and store for their customers. They are typically the best option for short-haul and multi-stop loads, but there are vast differences in operations, equipment, and back-end support from fleet to fleet. During market shifts, small fleets generally are very quick to increase or decrease rates, whereas larger fleets remain steadier in pricing and are usually more cost-effective during hot markets. Companies working with asset-based fleets have to be weary of overbooking issues and maintaining truck utilization throughout the year. The efficiency of asset-based carriers heavily depends on how well they align with your company attributes and the type of freight you’re moving.
Brokers are more of a middle-man. They don’t have their own fleet, but they have access to a wide network of carriers across the nation. Brokers are very reactive to market shifts and can easily handle volume fluctuations while maintaining pricing. With value-added services, such as customized technology, track and trace, and 24/7/365 communication, brokers improve visibility and create a more efficient supply chain. Brokers are typically not as competitive with shout-haul lanes, but serve as the ideal option for volatile markets because they can leverage their network while absorbing cost escalations.
All carriers used by a broker typically go through a vetting process. Here at Spot, we have a custom scoring system that predicts performance probability. We then look at a carrier’s scope and match them based upon our shippers’ needs. As an added benefit, brokers manage the entire transportation process, allowing for shippers to concentrate on their core job duties.
There is no current data supporting the idea that shippers should only work with an asset-based company or a broker. There is also no set percentage break down if a shipper chooses to use a mix of both options. The key is to assess your business and the provider or providers that you are using. If you add the right broker into your current asset-based supply chain, they can add tremendous value. Brokers provide industry focus and a true relationship-based service.
At Spot, we’ve built our network around JIT supply chains that require an understanding of time sensitive deliveries, order changes, volume fluctuations, and 24/7 operations. We have created carrier strategies and service teams specifically for our shipper base. While the options may seem daunting, the best route is to review your business attributes, research your potential choices, and align with carriers and brokers that best fit your needs. A mixture of asset-based and brokerage can most likely create a happy medium for shippers, and here at Spot, we know that a fully leveraged broker will make all the difference.