January 2009 | Commentary | Carriers Corner

The Benefits of Reducing Your Carrier Base

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You've heard the adage, "Focus on the journey, not the destination." In the transportation business, you must be relentlessly focused on both. This is where carrier relationships come into play.

Allocating individual shipments haphazardly across a large number of carriers limits both operational efficacy and economies of scale. Too many touch points in the supply chain increase the likelihood that key steps will be bypassed, resulting in a breakdown that could lead to lost shipments, customers, and profits.

Focus on building productive relationships with select providers who deliver sustainable competitive advantage in addition to delivering freight. While reducing your carrier base sounds like a daunting task, the rewards far outweigh the risks.

In addition to avoiding business disruptions by reducing the number of touch points in your supply chain, shrinking your carrier base can lead to significant cost savings. When using multiple niche providers, you lose operational efficiencies and dilute the value of your buying power. By working with one carrier, you concentrate your spending and obtain more economical pricing options. You also realize savings on the back end by reducing processing costs and paying fewer freight bills.

Supply chain visibility is another area where you can reap the rewards of a smaller carrier base. Technological advances provide the ability to "see" where your freight is at all times. This gives you the flexibility to make real-time business decisions, including communicating delays to customers and planning for contingencies. When multiple parties who aren't connected handle your goods, you can quickly lose visibility into your supply chain. Streamlining your carrier base enables you to answer customer inquiries about their shipments' status.

MAKING THE RIGHT CHOICE

As the critical link between you and your customers, carriers should be seamless partners in your business. They should understand your business needs and how those needs fluctuate. They should monitor their own performance and make changes proactively when needed. They should have flexibility to adapt to your customers' needs. Most importantly, they should help maximize your transportation investments.

Consider the following points when choosing core carriers:

  • Scope of network. Where does the carrier provide coverage, and how does this align with your existing business and growth strategies?
  • Breadth of portfolio. Are end-to-end solutions available, and to what degree does the carrier integrate disparate services?
  • Economies of scale. Does the provider's volume enable cost efficiencies? Can you realize true end-cost savings?
  • Commitment to service. Can the carrier demonstrably enhance your brand through high-quality service delivery?
  • Operations interface. How will command, control, and communication be exercised internally and externally?
  • Financial footing. Is the provider positioned for reliable continuous operation? Does it mitigate risk or add to it?

Market pressures are at play today that cannot be controlled. Transportation doesn't have to be one of them. By reducing your carrier base, you can develop lasting partnerships resulting in a seamless experience for you and your customers.

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