No matter what you’re moving, whether it be ice cream, poultry, pizza or mixed vegetables, growing a business with a carrier partner is just as important as having the right product at the right place, at the right time and in the right condition. Partnering with an innovative carrier partner is vital to building a company’s “carrier base.” With this partner as a part of your foundation, they can learn the intricacies of your business, ensuring that they’re well-aligned to your overall cold chain strategies and goals.
Here are some do’s and don’ts to consider when sourcing a carrier partner:
1. Do a customer reference check on potential carrier partners; Don’t purchase transportation without doing due diligence. A simple reference call to the carrier partner’s customer base should yield the good, the bad and the ugly. Most carriers have a few key customers who they utilize for these discussions. Be sure to check with the reference point of contact to verify how long have they been working with the carrier partner, the on-boarding process and anything they would do differently during the implementation process. Make sure to also ask how many calls they’ve been a reference for. Other topics to inquire about include what are their established protocols for safety and security when transporting products, the age of fleet, the average driver’s tenure and fleet procurement strategy.
2. Do partner with a provider who offers innovative solutions that lower overall landed costs; Don’t purchase transportation solely on price. Price doesn’t always equal quality service, and more often than not, buying on price will not support a long-term, effective transportation strategy. If a buyer does not have a strategy, other than being focused on price, their organization is setting themselves up for failure. Organizations that begin with a plan and share the plan with their carrier partner will yield the optimal combination of quality service and a competitive price.
Building a space where the customer and carrier partner can collaborate together and achieve mutual goals is easier said than done though. It takes time to build respect for each other’s businesses and a certain level of trust that each business can support and help the other grow. Regardless if you’re a veteran in the industry or a first-time buyer of transportation, be upfront about expectations during initial conversations.
3. Do clearly define what key performance indicators (KPI) mean to your business; Don’t rely on your transportation service provider’s standard KPIs. Your goals may not be the same as the goals of your carrier partner. Clearly define which KPIs your organization expects and ask how these are being measured. For example, when measuring on-time delivery performance, does the carrier partner measure by minute, hour or a window of time? A few other KPIs to consider are claims frequency, ration of transportation cost to value of product and cost per unit, case or pound.
4. Do partner with a provider that is committed to delivering initial and ongoing value; Don’t partner with a provider who can’t commit to adding value after partnering. Look beyond the price tag and work to understand the fine print around what value the carrier partner is committed to during the first year of the agreement/contract. How soon will you as the shipper see these results? Do they have examples of benefits other customers have seen? What is their service recovery process? Additionally, identify what the targets will be in years two and three of the deal, when these targets will be addressed and how the results will impact your bottom line. Having a clear-cut path forward—prior to agreeing to terms—will help keep both shipper and carrier mutually accountable.
Another aspect to consider that isn’t a new trend, but simply an area where many shippers don’t take full advantage of is their carrier partner’s consolidation network. Many of the larger national providers typically offer value-added transportation to their cold chain storage clients located in a multi-customer distribution center/site. These integrated service providers are more than likely delivering to your end customer’s distribution center, so take advantage of their established network.
And, more importantly, no one can guarantee the marketplace’s excess capacity seen in the first half of the year through year’s end. Because of this, larger shippers are wisely negotiating their rates to ensure stable capacity in the latter half of the year. Doing so will help shippers mitigate marketplace changes, as well as eliminate the need to source additional carrier partners at the last minute.