Not every surprise is a good one—especially when your customers, shipments, and transportation are concerned. But you can develop a comprehensive truckload plan so you’re prepared to handle just about anything. Here’s a simple formula that many successful shippers already use as a truckload strategy in any market environment.
Core Carrier +1 (or CC+1 for short).
Here’s how it works for companies that prefer to have both asset carriers and 3PLs working in their supply chains. First, they determine the right number of asset providers (the “core carrier” part of the equation) for your business. Then, they add a single third party logistics (3PL) provider (the “+1”—more on that in a moment). With the right balance between asset players and 3PL, they can handle transportation demand.
If you decide this is a good approach for your business, how do you strike the perfect balance between asset players and your chosen 3PL? Here are a few pointers for making CC+1 work for you.
Step 1: Find the right mix of asset providers
The goal is to create a stable network of asset providers (the CC in this formula). You’ll want to identify enough providers to cover lanes, but not so many that your internal team becomes overwhelmed trying to work with them. Also, avoid spreading your lanes over too many carriers. Your volume needs to be meaningful not just to you but your core carrier too.
Consistent volume allows carriers to:
- Plan their business over a longer period of time
- Create continuous moves by combining multiple shippers’ freight
- Capture backhaul freight that aligns with their needs
- Eliminate unnecessary empty miles and deadhead expenses
- Provide regular schedules and routes for drivers and prevent unproductive time—all of which can help recruit and retain drivers
Make your freight attractive to asset players, and they’ll be eager and willing to take your freight where you need it to go.
Step 2: Select the right 3PL to augment your strategy
You’ve taken care of the CC in our formula. Now comes the +1: choosing one 3PL to work with as part of your transportation strategy.
Why just one? For the same reason you don’t want too many asset players on your bench: you’ll lose the ability to leverage scale, volume, and relationship management to your advantage. Working with multiple 3PLs can artificially alter the balance of supply and demand in a market if the 3PL’s start chasing the same carriers.
Your 3PL can provide the capacity of many carriers and expand your equipment options in the desired lane. They can coordinate widely fluctuating freight volumes from day to day and week to week, even as they work with you as part of your routing guide in the lanes that make sense.
When you’re sizing up the capabilities of 3PLs, look for:
- Size and diversity of carrier pool. To meet your capacity needs cost effectively and rapidly, the 3PL must work with multiple carriers. Ideally, the 3PL will have national or international capabilities in many types of transportation so you gain more leverage through their aggregated volumes.
- Financial stability. Be cautious of a 3PL or freight broker that does not fulfill its financial obligations to carriers. To avoid problems downstream, choose a financially strong 3PL that pays carriers quickly.
- Ability to control risk. Your 3PL should have internal controls to monitor carrier service, operational practices, and insurance requirements in near real time to reduce your risk as a beneficial cargo owner.
- Intellectual Capital. 3PLs that offer consulting and recommendations add value far beyond capacity. They can share best practices from their work with companies in a wide variety of industries. This can include developing regional calendars in advance of peak shipping weeks with demand forecasts and making commitments to pricing and volumes in advance. They can provide benchmarking information and offer pricing intelligence. That can help your organization develop better planning for a long-term transportation strategy.
A successful CC+1 strategy draws upon the best competencies and expertise of both asset and 3PL providers. It can greatly enhance your ability to execute across your plan and budget. And it can deliver flexibility to your supply chain you haven’t seen in the past—the kind of surprise no transportation professional minds receiving.
Bob Biesterfeld is the director of transportation for the sourcing division of C.H. Robinson Worldwide, in Eden Prairie, MN. He works closely with national and regional food retailers, as well as food manufacturers and grower-shippers to improve supply chain performance and the cold chain. Bob is a contributor to the company’s Transportfolio blog. Read his article on 4 Ways Food and Beverage Companies Fill the Perfect Order and subscribe to get fresh supply chain news in your inbox.