Working with Asset Based Carrier or 3PL to Manage Transportation

Transportation Management
  • November 15, 2023

In the world of logistics and supply chain management, businesses are continually faced with critical decisions that shape the efficiency, cost-effectiveness, and success of their transportation strategies. Among these decisions, one of the most pivotal is whether to partner with Asset-Based Carriers or Third-Party Logistics (3PL) providers. The choice between these two transportation approaches has significant implications for companies of all sizes and industries. In this article, we will unravel the core differences, advantages, and considerations associated with each option to help you make an informed decision.

Understanding Asset-Based Carriers

Asset-Based Carriers, as the name suggests, are transportation companies that own and operate their physical assets, including trucks, trailers, and sometimes even warehouses. This direct ownership of assets provides them with a high degree of control over the transportation process.

Some asset-based logistics providers go beyond just owning trucks and trailers. They also possess critical assets such as warehouses, distribution centers, and containers. These assets play a vital role in ensuring the smooth movement of commodities within the supply chain. By owning these assets, asset-based carriers have the advantage of reducing costs for their clients' supply chain functions.

However, it is important to note that ownership of assets also comes with its fair share of hurdles. Managing and maintaining a fleet of trucks, trailers, and warehouses requires expertise and resources. Therefore, it is crucial to choose an asset-based carrier that demonstrates their ability to efficiently move their clients' freight.

Advantages of Asset-Based Carriers:

  • Direct Control: One of the primary advantages of working with Asset-Based Carriers is the level of direct control they offer. Since they own the transportation assets, they can provide more immediate and hands-on management of shipments.
  • Speed: Asset-Based Carriers often excel in terms of speed and response time. Their dedicated fleet can be mobilized quickly, reducing transit times.
  • Consistency: Businesses that prioritize consistency in their supply chain operations may find Asset-Based Carriers appealing. These carriers can maintain a high level of service consistency, which can be essential for meeting customer demands.
  • Capacity: For companies with stable and predictable shipping volumes, Asset-Based Carriers can offer dedicated capacity. This can be particularly advantageous during peak seasons or when dealing with specific transportation requirements.

Considerations with Asset-Based Carriers:

  • Limited Flexibility: While Asset-Based Carriers offer direct control, this can sometimes come at the expense of flexibility. They may have limitations in terms of available routes or specialized services.
  • Potential Cost: The direct ownership of assets can lead to higher operational costs. This may translate into potentially higher transportation rates compared to 3PLs.

Diving into Third-Party Logistics (3PL)

In contrast to Asset-Based Carriers, Third-Party Logistics providers, or 3PLs, bring expertise in logistics and transportation management, helping businesses navigate complex shipping requirements and regulations. They can adapt to changes in shipping volumes, routes, and services quickly. This adaptability can be especially valuable for businesses with dynamic transportation needs. Additionally, many 3PLs leverage advanced technology and systems to optimize transportation routes, track shipments in real-time, and provide valuable analytics many shippers haven’t invested in.

When it comes to determining the best mode of transportation for your freight movement, a professional 3PL goes beyond their expertise and adaptability. They take a thorough approach to understanding your unique needs and goals. By analyzing factors such as shipping volume, frequency, destinations, and the types of goods you transport, they can align their strengths with your specific requirements. This careful assessment allows them to recommend the most suitable mode of transportation that will optimize the movement of your freight.

Furthermore, a professional 3PL recognizes the importance of technological integration in today's supply chain. They understand that efficient transportation management relies on leveraging advanced systems and tools. Therefore, they not only possess the necessary technology to streamline your shipping operations but also have the expertise to utilize it effectively. With their advanced technology and systems, they can optimize transportation routes, track shipments in real-time, and provide you with valuable analytics that offer insights into your supply chain's performance.

Advantages of 3PLs:

  • Flexibility: 3PLs are known for their flexibility. They can adapt to changes in shipping volumes, routes, and services quickly. This adaptability can be especially valuable for businesses with dynamic transportation needs.
  • Cost-Efficiency: Outsourcing transportation to a 3PL can often lead to cost savings. They have the expertise and networks to find the most cost-effective transportation solutions.
  • One-Stop Shop: 3PLs offer a comprehensive range of logistics services beyond transportation, including warehousing and fulfillment companies, and inventory management. This one-stop-shop approach can simplify supply chain management.
  • Expertise: 3PLs bring expertise in logistics and transportation management, helping businesses navigate complex shipping requirements and regulations.
  • Technology: Many 3PLs leverage advanced technology and systems to optimize transportation routes, track shipments in real-time, and provide valuable analytics.

Considerations with 3PLs:

  • Indirect Control: While 3PLs offer numerous advantages, they also involve relinquishing some direct control over transportation. Shippers must trust their 3PL partners to manage their shipments effectively.
  • Variable Quality: The quality of service among 3PL providers can vary. Choosing the right 3PL partner is crucial to ensuring consistent and reliable transportation.

What is a Non-Asset based carrier and how do they operate?

A non-asset based carrier is another term for a Third-Party Logistics providers, and are intermediaries that connect shippers with carriers and offer a wide range of logistics services. Unlike asset-based logistics companies, 3PLs do not own transportation assets themselves. Instead, they leverage their expertise and network to find the most cost-effective transportation solutions for their clients. This flexibility and adaptability are especially valuable for businesses with dynamic transportation needs.

In addition to transportation services, 3PLs also provide comprehensive logistics solutions that go beyond transportation. This includes warehousing and fulfillment companies, as well as inventory management. By offering a one-stop-shop approach, 3PLs help simplify supply chain management for their clients.

Outsourcing transportation to a 3PL can often result in cost savings. Their extensive industry knowledge and established partnerships allow them to negotiate better rates and optimize shipping routes. This expertise enables 3PLs to find the most efficient and cost-effective solutions, ultimately saving their clients money.

However, it's important to note that when working with a 3PL, shippers must trust their partners to manage their shipments effectively. While 3PLs offer numerous advantages, the quality of service can vary among providers. Therefore, choosing the right 3PL partner is crucial to ensuring consistent and reliable transportation services.

How do both Asset-Based Carriers and Non-Asset Based Carriers reduce costs and mitigate risks in freight movement?

Both asset-based carriers and non-asset based carriers employ strategies to effectively reduce costs and mitigate risks in the movement of freight. Asset-based carriers achieve this by owning and utilizing their own assets, such as warehouses, distribution centers, trucks, and containers. By having direct control over these resources, asset-based carriers can optimize their operations, eliminate unnecessary expenses, and streamline the supply chain functions of their clients. This ownership also allows asset-based carriers to provide more competitive pricing and better control over service quality.

On the other hand, non-asset based carriers reduce costs and risks by leveraging their ability to contract or sub-lease services with established carriers. Through their expertise in negotiating contracts and building strong relationships with carriers, distribution centers, and warehouses, non-asset based carriers can secure advantageous terms. These carriers hold their contracted partners accountable for any mistakes in billing or freight movement, minimizing potential financial losses for their clients.

Both types of carriers strive to customize solutions that align with their clients' specific needs and goals. By understanding the unique requirements of each client, carriers can design strategies that optimize efficiency and effectively overcome any obstacles in freight movement. Ultimately, their aim is to provide cost-effective and reliable transportation services while mitigating the inherent risks associated with the transportation of goods.

How do Asset-based Carriers and Non-asset based carriers ensure on-time delivery?

Asset-based carriers and non-asset based carriers both prioritize ensuring on-time delivery for their clients, although they employ different approaches to achieve this goal. Asset-based carriers have direct control over the transportation assets they own, such as trucks and warehouses. By leveraging their own resources, they can efficiently manage their supply chain operations and monitor every step of the delivery process. This level of control allows them to optimize routes, maintain schedules, and promptly address any issues that may arise.

On the other hand, non-asset based carriers do not own transportation assets themselves. Instead, they collaborate with established carriers through contracts or sub-leases to transport their clients' products. Despite not having direct control, these non-asset based carriers specialize in coordinating and overseeing the intricate tasks of freight movement. They take on the responsibility of negotiating contracts with carriers, cultivating strong relationships with distribution centers and warehouses, and holding them accountable for any billing mistakes or issues with freight movement.

Both types of carriers aim to achieve on-time delivery by actively managing various aspects of the transportation process. Asset-based carriers, with their direct control over assets, can optimize efficiency by closely monitoring all steps of the supply chain. Non-asset based carriers, although not owning the assets, excel in streamlining operations and negotiating advantageous contracts to ensure timely transportation.

The choice between asset-based and non-asset-based carriers depends on the specific needs and goals of a company. A professional supply chain consultant can help businesses determine which approach is best suited for their requirements while managing all aspects of freight movement effectively. By customizing solutions and leveraging their expertise, 3PLs facilitate efficient and reliable transportation services to ensure on-time delivery and meet client expectations.

In order to make an informed decision between asset-based and non-asset-based 3PL providers, it is essential for businesses to evaluate their exact needs and goals. Consider questions such as: Do you need to scale your operations across multiple states? Are you looking to expand your reach to customers across geographic borders? Do you seek the latest innovations in supply chain support? Are flexible costs a priority for your business?

By carefully assessing these factors and working closely with a trustworthy 3PL provider that offers reliability and transparency every step of the way, businesses can streamline their logistics processes, enhance efficiency, and ultimately achieve their desired outcomes.

What are the Goals of an Asset-based Carrier and a Non-asset Based Carrier?

Asset-based carriers and non-asset-based carriers are two distinct types of service providers in the supply chain and logistics industry. While both play a crucial role in facilitating the transportation of goods, they have different goals and approaches.

Asset-based carriers are logistics companies that own and manage the physical assets used for transporting freight. These assets can include trucks, ships, planes, warehouses, and other infrastructure. One of the primary goals of asset-based carriers is to increase the overall efficiency of their supply chain operations. By owning the assets they use, these carriers have more control over the transportation process, allowing them to optimize routes, reduce transit times, and minimize delays. Additionally, asset-based carriers strive to improve communication with customers, ensuring that they have up-to-date information on shipment status and providing proactive support when issues arise. Reducing both soft costs (such as resource allocation and decision-making) and hard costs (including freight claims and accounting) is another important objective for asset-based carriers. They aim to streamline processes and minimize inefficiencies to provide cost-effective transportation solutions for their clients. Moreover, asset-based carriers prioritize risk mitigation and error reduction, focusing on improving on-time delivery and preventing disruptions in the supply chain.

On the other hand, non-asset-based carriers, which do not own their own equipment, operate by leveraging existing transportation networks through contractual agreements with other service providers. This type of carrier may partner with subcontractors, lease equipment, and configure custom warehousing needs to meet specific logistic requirements. The primary goal of non-asset-based carriers is to optimize the coordination and synchronization of transportation services. They aim to select the most suitable carriers for a specific shipment, negotiate competitive rates, and ensure that the goods are transported seamlessly from origin to destination. Unlike their asset-owning counterparts, non-asset-based carriers offer a key advantage: flexibility. This flexibility allows them to tap into a network of various partners, connecting clients with the right partners who may be more tailored to perform the job than the team over at the asset-based carrier company. Like asset-based carriers, non-asset-based carriers also focus on improving communication with customers to provide real-time updates and assistance throughout the transportation process. By relying on established networks, non-asset-based carriers seek to reduce costs for their clients in terms of asset ownership and maintenance. They aim to maximize efficiency and minimize disruptions while offering flexible and scalable transportation solutions. Additionally, non-asset-based carriers place importance on mitigating risks and preventing errors by proactively monitoring the movement of goods and addressing any potential issues promptly.

Key Decision Points

When deciding between Asset-Based Carriers and 3PLs, several key factors should influence your choice. First and foremost, consider your shipping volume, frequency, destinations, and types of goods you transport. These factors should align with the strengths of your chosen transportation partner. Additionally, evaluate the financial implications of each option. While 3PLs may offer cost savings, Asset-Based Carriers may provide more direct control that justifies a higher cost. Lastly, assess the importance of technological integration in your supply chain. Both Asset-Based Carriers and 3PLs leverage technology, but their systems and capabilities may differ.

To illustrate these points with a practical example, let's examine a hypothetical scenario involving Company A. Company A operates an online storefront and also ships products from the United States to Canada. For its online storefront, Company A could benefit from partnering with an Asset-Based Carrier. This is primarily because there are no additional upcharges or management fees involved when the carrier owns all the necessary assets, leading to cost savings in warehousing, inventory management, and shipping operations.

On the other hand, for its international shipping operations, Company A finds it more advantageous to use a brokerage carrier. This decision is based on the need to manage an intermodal shipping platform effectively. The brokerage carrier facilitates the integration of trucking and railway systems across two countries, optimizing transit times and costs. This example clearly shows how different aspects of a company's shipping requirements can dictate the choice of carrier type. 

Therefore, by analyzing your specific shipping needs as demonstrated in the case of Company A, you can more effectively determine which type of carrier—Asset-Based or 3PL—will best meet your logistical and financial objectives.

Hybrid Approaches

In some cases, businesses find success by adopting hybrid approaches that leverage both Asset-Based Carriers and 3PLs. For example, they may utilize Asset-Based Carriers for certain core routes while relying on 3PLs to manage surges in demand or specialized services. This hybrid strategy combines the strengths of both approaches, offering flexibility and control.

Unlock Your Optimal Logistics Strategy with Visigistics

At Visigistics, we specialize in logistics solutions tailored to your unique needs. Our team of experts is here to help you navigate the complexities of transportation, whether you opt for Asset-Based Carriers, 3PLs, or a hybrid approach.  Click here to get a domestic trucking freight quote or an international shipping freight quote.  Contact us to discuss your specific requirements and let us create a customized logistics strategy that maximizes efficiency and cost-effectiveness for your business.

Frequently Asked Questions:

In what situations would expedited and air freight services be beneficial for businesses?

Expedited and air freight services are particularly beneficial for businesses when time is of the essence. If a shipment needs to reach its destination urgently, such services can ensure quick delivery, even at the last minute. Businesses facing tight deadlines or unexpected delays can rely on expedited and air freight carriers to swiftly transport their goods in a safe and efficient manner. With a network of reliable carriers at their disposal, businesses can offload the logistics of urgent shipments and receive real-time updates on the progress of their delivery. Overall, expedited and air freight services are a valuable solution for businesses that require fast, reliable shipping options to meet critical demands and maintain customer satisfaction.

How does Visigistics simplify the process of shipping Less Than Truckload (LTL) freight for its customers?

Visigistics streamlines the shipping of Less Than Truckload (LTL) freight for its customers by providing competitive rates that have been pre-negotiated with a wide network of LTL carriers. Through their advanced Transportation Management System (TMS), customers can instantly receive quotes, book shipments, track their freight, and manage all aspects of the shipping process efficiently. Additionally, Visigistics assigns a dedicated LTL freight expert to address any queries or concerns, simplifies invoicing by consolidating all shipment costs, and offers comprehensive reporting tools for easier performance evaluation and cost analysis.

How can managed transportation solutions help businesses stay competitive in the evolving supply chain landscape?

Managed transportation solutions offer businesses a strategic advantage in the rapidly evolving supply chain landscape by providing expert guidance and innovative approaches to logistics management. By collaborating closely with clients to understand their unique needs and challenges, these solutions help in designing and implementing cost-effective and service-oriented transportation networks. This proactive evaluation and design of distribution systems enable businesses to optimize their shipping budgets, enhance response times, and ensure efficient supply chain operations. Ultimately, by leveraging managed transportation programs, companies can position themselves above the competition, adapt to changing market demands, and maintain a competitive edge in the dynamic and complex supply chain environment.

What are the potential drawbacks of working with a non-asset-based 3PL provider in terms of control, quality, and compliance?

When considering the partnership with a non-asset-based third-party logistics (3PL) provider, it is important to acknowledge several potential drawbacks. These drawbacks include:

1. Limited Control Over Operations: One significant issue is the reduced level of control that companies may have over the operations of a non-asset-based 3PL provider. As these companies do not own physical assets, their ability to directly manage and oversee operations, such as transportation and warehousing, is diminished. This can lead to challenges in ensuring the efficiency and effectiveness of the logistics processes.

2. Quality of Services Dependent on Subcontractors: Non-asset-based companies often rely on subcontractors to deliver services. This reliance introduces a risk factor, as the quality of services provided by subcontractors may vary. Inconsistent service quality could adversely impact the overall performance and reliability of the supply chain operations.

3. Compliance Management Across the Network: Another drawback is the potential difficulty in ensuring compliance across the entire logistics network of a non-asset-based 3PL provider. With multiple subcontractors and partners involved, maintaining consistency in adherence to regulations, safety standards, and operational protocols can be challenging. Companies may find it more demanding to uphold compliance standards across a decentralized network.

Despite these challenges, it is important to note that these drawbacks are not insurmountable. Companies working with non-asset-based 3PL providers can mitigate these risks through proactive oversight, robust performance monitoring, effective communication, and strategic partnerships. By implementing stringent quality control measures, fostering strong relationships with subcontractors, and establishing clear compliance guidelines, companies can navigate the potential drawbacks and reap the benefits of collaborating with a non-asset-based logistics partner.

What advantages does a non-asset-based 3PL provider offer in terms of costs, coverage, and scalability?

Non-asset-based 3PL providers offer a range of advantages in terms of costs, coverage, and scalability. Companies benefit from the flexibility in costs that these providers offer, as they can tailor services based on specific needs without being tied to fixed assets. Moreover, non-asset-based providers provide extensive geographic coverage, enabling businesses to expand their reach and serve customers across broader areas efficiently. These providers also present opportunities for innovation and customization, allowing businesses to access cutting-edge solutions and scale operations as needed. By partnering with non-asset-based providers, companies can tap into a diverse pool of resources, which is particularly beneficial for growing businesses and e-commerce operations seeking logistics solutions that facilitate reaching customers in various geographic locations.

What services do non-asset-based 3PL providers typically offer?

Non-asset-based 3PL providers typically offer a range of services that include freight forwarding, brokerage, consulting, and management. These providers do not own their own transportation assets but leverage partnerships with a network of logistics providers to offer flexible and scalable solutions to their clients. Through these partnerships, non-asset-based 3PL providers are able to provide comprehensive logistics services that encompass various aspects of supply chain management, catering to the diverse needs of their customers.

What are the disadvantages of using an asset-based 3PL provider?

When considering using an asset-based 3PL provider, there are certain drawbacks to be aware of. One disadvantage is that these providers typically have higher fixed costs compared to non-asset-based providers. This can result in potentially higher fees for their services. Additionally, asset-based 3PL providers may offer less scalability, meaning they may not be as flexible in adapting to changes in your business needs or fluctuations in demand.

Another disadvantage is that asset-based providers might have limited geographical coverage. Since they rely on their own equipment and distribution network, your business may be restricted in terms of reaching certain regions or expanding into new markets. This limitation can pose challenges for businesses, especially those involved in e-commerce, as they may struggle to effectively distribute goods to customers in different locations using a localized supply chain network.

What are the benefits of choosing an asset-based 3PL provider for logistics operations?

Selecting an asset-based 3PL provider for logistics operations can bring about several advantages. By opting for an asset-based company, you gain total control over your logistics operations, including a variety of service options and the ability to manage coverage and costs effectively. Such providers guarantee consistency and reliability by having control over their assets, ensuring that your supply chain operations run smoothly. Essentially, choosing an asset-based 3PL provider eliminates unnecessary intermediaries, allowing for customized solutions that align perfectly with your unique business requirements, offering increased reliability and flexibility in managing your supply chain effectively.

What are the differences between asset-based and non-asset-based 3PL providers?

Asset-based 3PL providers are companies that own and manage their physical assets, such as trucks, warehouses, and distribution centers, allowing them total control over logistics operations but potentially leading to higher fixed costs. On the other hand, non-asset-based 3PL providers do not own physical assets but facilitate arrangements among different logistics providers, offering flexible costs and scalability, though they may have less control over operations. Asset-based providers provide consistency and a wide range of services but have limitations in scalability compared to non-asset-based providers, who can offer greater geographic coverage but might have to rely on subcontractors for services. Ultimately, businesses should assess their specific needs and objectives to decide whether an asset-based or non-asset-based 3PL provider aligns better with their requirements.

How does Visigistics handle flatbed and specialized freight shipments, and what benefits does it offer in this area?

Visigistics manages flatbed and specialized freight shipments meticulously, focusing on prioritizing attention to detail and safety. They ensure that every load is overseen by dispatch supervisors round the clock, guaranteeing the use of certified and insured carriers throughout the process. Customers benefit from having a dedicated account executive available for any required assistance, along with access to online tracking and document retrieval features for transparency and convenience. Visigistics provides tailored shipping solutions that cater to the unique demands of flatbed and specialized freight transport, offering a comprehensive suite of benefits in this specialized area.

What are the advantages of using Visigistics for ocean freight solutions?

Visigistics offers a range of advantages when it comes to ocean freight solutions:

  • Competitive rates that have been pre-negotiated with a wide network of ocean carriers, ensuring cost-effectiveness.
  • The option to use FCL (Full Container Load) shipping for valuable cargo, providing exclusivity and security during transit, particularly for larger shipments of 12+ pallets.
  • LCL (Less than Container Load) shipping allows for sharing container space with other cargo, offering a more economical option for smaller loads being shipped overseas.
  • The convenience of dealing with one company for all logistics requirements, which includes services such as ocean and air freight, customs brokerage, trade compliance, and surface transportation.

What are the benefits of utilizing truckload capacity services provided by Visigistics?

Benefits of utilizing truckload capacity services provided by Visigistics:

  • Enjoy dedicated support and assistance, ensuring a commitment to you and your business needs.
  • Receive personalized service with a designated account representative assigned to cater specifically to your requirements.
  • Benefit from seamless cross border transportation to and from Mexico and Canada, expanding your shipping reach without constraints.
  • Easily track and monitor your shipments online, enabling real-time visibility and control over the movement of your goods.
  • Explore a wide range of options suitable for single loads or comprehensive supply chain management, with tailored solutions available to accommodate your unique logistics needs.

How can partnering with a third-party logistics company that offers both asset and non-asset carrier services save money on supply chain movements?

Partnering with a third-party logistics company that delivers both asset-based and non-asset-based services can significantly enhance your supply chain operations. By utilizing a logistics provider like this, businesses can leverage the strengths of both types of services. Asset-based services use the company's assets and resources, ensuring reliability and control over the shipments. On the other hand, non-asset-based services provide flexibility and scalability, enabling the logistics provider to choose the most cost-effective shipping methods and carriers depending on the current market conditions and specific client needs. This dual approach allows the logistics company to adapt to various client requirements and volumes, optimizing routes and loads efficiently. Such versatility ensures that businesses can manage their supply chains more cost-effectively, adapting quickly to changes in demand or market conditions without sacrificing service quality or timeliness.

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