Choosing a 3PL: Safety First
When negotiating transportation services with a third-party logistics provider (3PL), you may find that they emphasize efficiency, customer service, competitive pricing, and timeliness. Safety is rarely a selling point and may go unmentioned during discussions. When shopping for 3PL services, however, a good safety record should be at the top of your checklist.
Contracting with a safety-focused 3PL ensures that your company is covered if products or goods are stolen or lost, or if the carrier is involved in an accident that damages your cargo.
What to AskInformed outsourcers will ensure that the 3PL they choose has complete confidence in its carrier base. Here are four questions to ask your potential 3PL regarding its carrier selection guidelines and requirements.
1. Are service agreements in place? The 3PL should have a process in place to guarantee your freight's safety. Not only should the 3PL have a service agreement with your company, it should also have a signed contract with the carriers it selects to handle your freight.
2. Is insurance coverage current? Can the 3PL verify that its chosen carriers' insurance is up to date and sufficient? If it is not, how does that affect your freight? In most cases, if a carrier's insurance is out of date, you are not covered for loss and damage to your freight. Insurance coverage can change daily and should be checked every time the 3PL uses the carrier.
3. What are the carrier safety ratings requirements? What are the 3PL's requirements for carrier safety ratings? Several factors affect these ratings, which fall into the following categories.
- Not rated - assigned to all new commercial motor carriers that have not had a Federal Motor Carrier Safety Administration (FMCSA) compliance review.
- Conditional - assigned when a motor carrier is out of compliance with one or more safety requirements.
- Satisfactory - assigned when a carrier passes an FMCSA compliance review with no evidence of substantial non-compliance with safety requirements.
- Unsatisfactory - assigned when a carrier's records indicate substantial non-compliance with safety requirements during a compliance review.
The 3PL should be aware of these ratings and have strict guidelines in place to ensure that it uses only reputable and safe carriers to haul your freight. Poor safety ratings could indicate that the carrier has neglected issues—using out-of-service drivers or hazardous equipment, for example. If carrier scores drop, the 3PL should investigate the effect these ratings violations might have on your freight's safety.
4. Does the carrier have active authority? A reputable 3PL will choose carriers that have been granted active authority from the federal government to haul goods.
Up to ParYour 3PL's chosen carriers should have proven track records and be well regarded within the transportation industry. The 3PL also should keep a file on all contracted carriers it uses and monitor it monthly for compliance with 3PL selection criteria.
While it is the 3PL's responsibility to ensure its carriers' safety measures are up to par, it is your job to choose a reputable 3PL whose safety practices live up to your own.
Cost and efficiency are important factors in moving freight, but shouldn't be the only ones you consider. Using a 3PL whose safety practices are questionable could end up costing you more in the event of an accident or freight loss.