To add elasticity to your shipping, think small—small carriers, that is
When you’re picking carriers to move your freight, there is no shortage of options; according to the U.S. Department of Transportation, the number of for-hire carriers on file with the Federal Motor Carrier Safety Administration exceeded 586,000. Private carriers totaled over 747,000 and other interstate motor carriers totaled over 144,000.
Truckload capacity needs change all the time because of a wide variety of economic, social, political, and environmental factors. Therefore, it’s important that shippers establish relationships with a variety of truckload carriers so that fulfilling capacity needs is as easy as possible, as often as possible.
The best truckload strategies combine large and small carriers, as well as the expertise of a third-party logistics provider. Here’s why:
Key Benefits of Diversifying Your Truckload Carriers
Some shippers limit themselves to working the very largest truckload carriers—the ones with the most equipment in the hopes that they will gain access to a huge pool of equipment and leverage their volumes for better rates. Other reasons for working with large carriers can include operational efficiency within the drop trailer yards and shipping docks.
Large carriers are increasingly selective, with corridor and volume commitments that contribute to highest fleet efficiency. Large carriers often prefer regular freight in consistent lanes, so once they drop off a load, they can plan another will be available nearby for pickup. Increasingly, they are not interested in loads that don’t fit into their service network because these loads create inefficiency or lower yield.
Therefore, working with only large carriers may work for around 80 percent of your freight. But, what about the other 20 percent? Approximately 97 percent of the truckload carriers in the U.S. are small carriers, operating 20 or fewer trucks.
Around 91 percent qualify as extra small, operating 6 or fewer trucks. This means that only around 3 percent— an extremely small segment of the for-hire carrier base— of the carriers in the U.S. market are “large” and have 20 trucks or more in their fleets.
Smaller truckload carriers serve three vital functions:
- They travel to smaller, niche locations that bigger providers don’t service.
- They add elasticity to the market in dense corridors.
- They can be added to a shipper’s carrier base to help address lumpy demand and short lead time.
*Note: Chart includes private, for-hire, and motor carriers who did not specify their segment, but gave their fleet size. All other categories were excluded. Source: Federal Motor Carrier Safety Administration, U.S. Department of Transportation
The opportunity to access capacity and minimize price volatility is to think small. Making use of smaller providers enables shippers of any size to introduce elasticity to their shipping and increase their access to available equipment.
How to Diversify Your Truckload Carrier with a 3PL
While it may not be practical for you to manage relationships with several small carriers, you can call on a third-party logistics provider (3PL) top help you integrate small carriers strategically into your transportation plan.
Third-party logistics providers aggregate equipment, business processes, and price volatility for thousands of small carriers, yet give shippers a single relationship to manage. And 3PLs that work with the growing number of minority carriers offer a ready solution for shippers that have minority supplier initiatives. That generates positive returns for all parties involved.
As truckload capacity shifts over time, shippers who design a transportation strategy that balances their operations and supply chain needs with market capabilities will obtain the greatest flexibility and performance. The bottom line: large carriers have the benefits, small carriers have other benefits, and a 3PL is your key to leveraging them to meet your transportation needs.
Learn more about the truckload services an experienced 3PL can offer your business.
1. American Trucking Associations. “2013 American Trucking Associations Report.”
2. U.S. Government Accountability Office. “Modifying the Compliance, Safety, Accountability Program Would Improve the Ability to Identify High Risk Carriers.” February 2014.