How to Manage Risk Among Logistics Partners

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Businesses face their own unique challenges in today's waffling economy, with credit largely frozen, consumerism measured, supply lines lengthening, and transportation-related costs reaching record thresholds. Aside from these internal and market-driven obstacles, companies also encounter considerable risk partnering with carriers, forwarders, and third-party logistics providers laying down their own odds to deliver competitive value and service in a soft market.

High fuel costs and diminishing freight volumes have forced industry contraction. Carrier bankruptcies are on the rise and players of significant size are either choosing, or being forced, to leave the business. Others will do whatever it takes to secure shipper business, even if it means taking short cuts, skimping on service, or subcontracting with less reliable companies. Market fluctuations and pricing pressures create bad behavior.

As a result, scamming activities, negligent hiring, service and security oversights, fraudulent cash advances, and general malfeasance such as holding a load "hostage" to force a shipper's hand, have become familiar occurrences. Placing customer expectations, and your respective reputations, in the hands of third-party providers forces businesses to exercise extra due diligence in all transactions to ensure partners are viable for the long term and keep your priorities in mind.

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