Articles by: Anthony
In facilitating efficient management of your supply chain, choosing a transportation and logistics partner with right combination of services that fit your company needs is essential. Unfortunately, industry jargon breeds confusion. For example, 3PL (third-party logistics) and freight brokering are often spoken of as if interchangeable. They aren’t.
As our Cleveland 3PL experts can explain, there are some similarities, but also a few key differences. When you’re in the market for a logistics partner, those differences matter.
At On Time Delivery & Warehouse, we want clients to have the information and tools necessary to determine the best solutions for their operations.
What primarily sets 3PL services and freight brokers apart (as well as freight forwarders and motor carriers) is the range of services they provide (including whether they are asset or non-asset services) and the type of primary insurance coverage they carry. Much of this is spelled out by the Federal Motor Carrier Safety Administration (FMCSA), the regulator responsible for ensuring safety and legal compliance of over the road transportation.
What is a Freight Broker?
Freight brokers are individuals or entities that arrange for motor carrier transport of goods or property for a fee. The broker isn’t the one who actually transports the goods. They aren’t responsible for the property, nor do they own the equipment necessary to move it.
Being that freight brokers don’t own the assets themselves, their profit is gleaned from being a transactional agent. Through their connections, they buy and facilitate transport from mode-specific carriers, including truckload or less-than-truckload service providers, on behalf of their clients.
Another key point about freight brokers is the insurance coverage they offer in transport. Unlike motor carriers (those who own the trucks), brokers don’t provide cargo liability coverage. They may offer contingent coverage, but that will only kick in if the motor carrier’s coverage isn’t adequate to cover the losses. Wise freight brokers carry some form of insurance, but it’s not mandated by law so not all do. They can in some cases (depending on your contract) be held liable if a shipment is lost, stolen or damaged, but the contract could require the manufacturer or shipper to carry cargo insurance. These are points you’ll want clarified if you’re thinking of partnering with a freight broker.
By contrast, motor carriers own the assets required to move the goods, as well as carry the liability insurance coverage mandated by law.
If a freight broker fails to pay a carrier for a shipment moved on behalf of your business, your company may be stuck holding the bill. That’s why it’s important if you are contracting with a freight broker to work with one that has a solid reputation.
What is a 3PL (Third-Party Logistics Provider)?
A 3PL has the same operating authority of a freight broker under FMCSA terms. However, they do move freight for companies.
The primary difference is that a Cleveland 3PL like ours utilizes a much broader range of tools, services and technology compared to a freight broker. They can be asset services (like ours, as we own our own truck fleet) or non-asset providers, but instead of just moving materials, they also provide logistics services – for freight, warehousing or both.
Logistics providers also tend to have the most up-to-date track-and-trace technology necessary for supply chain transparency.
On Time Delivery and Warehouse offers these services, plus the value of a Container Freight Station and Customs exam site for consolidation and de-consolidation of both import and export freight.
What is a Freight Forwarder?
A freight forwarder is an individual or entity that offers transportation of goods for a fee, and also assembles and consolidates distribution operations of shipments.
A freight forwarder is responsible to transport products from the place it is received to the point of destination and can utilize transportation of rail, motor carriers and water carriers overseen by either the FMCSA or the Surface Transportation Board.
They may be responsible for holding the primary liability insurance coverage to move your goods if they are moving international freight in-house.
The Value of 3PL and Freight Broker Services
So why would anyone need to contract with a freight broker or logistics provider? Why not just go direct to the motor carrier?
The answer comes down to service and capacity. Most businesses don’t have relationships with hundreds of motor carriers necessary to ensure their supply chain is cost-effective and streamlined.
Having a trusted Cleveland 3PL, freight broker or freight forwarder available to help you navigate can be invaluable.
What are the definitions of motor carrier, broker and freight forwarder authorities? Nov. 11, 2017, FMCSA
More Blog Entries:
Cleveland 3PL Can Lower Client Liability Risk, July 30, 2019, Cleveland 3PL Provider Blog
Cleveland intermodal transportation is a combination of two or more shipping modes, such as truck, ship, rail or aircraft, used to move goods to their final destination. It’s often most beneficial for shippers who need to move materials a distance of 750 miles or more. Third-party logistics teams are often contracted to help oversee supply chains involving intermodal transport as it involves multiple carriers each responsible for a specific mode.
Intermodal transport has been altered drastically just in the last several decades, with advances including automated terminals and double-stack cars. This led to soaring growth associated with cost reductions and productivity gains. The benefits of Cleveland intermodal transportation are still apparent, but the momentum does appear to be slowing a bit, according to the Intermodal Association of North America (IANA).
Domestic intermodal volume has fallen 6 percent year-over-year in the first half of 2019 and there was a nearly 8 percent drop in the second quarter of 2019. Intermodal traffic moving in trailers and containers has grown just 0.1 percent in the last five years, but it did hit a peak just last year.
Cleveland truckload shipping rates are constantly in flux, thanks to numerous cost variables such as distance, type of product and mode.
The ever-changing cost of truckload shipping can make determining an exact rate for a single freight somewhat challenging, especially if the plan is to use more than one carrier or mode.
To keep Cleveland truckload shipping rates as transparent, manageable and consistent as possible, work with a third-party logistics (3PL) firm. Establish open communication upfront. This will ensure your truck pricing quotes are more accurate and that you’re fully leveraging all the services and technology benefits your 3PL and carrier partners offer.
Efficiency in Cleveland warehousing is essential for a company to thrive. This is especially true when inventory is one of a business’s largest assets – and biggest expenses. But warehousing is a huge undertaking, which is why so many firms outsource this crucial function to third-party logistics teams that specialize in it.
Third-party logistics companies, or 3PLs, work in varying capacities to manage your supply chain. Warehousing is a critical cog in the supply chain wheelhouse, key to the protection, packaging and delivery of your goods from the front end of production to the final consumer destination.
There can be benefit in managing in-house warehousing, but it should be understood it’s a challenging specialty enterprise all its own.
The term “driver detention” in trucking refers to occasions when a trucker’s fastest route is delayed at the location of either pickup origin or delivery destination – costing the driver and other stakeholders time and money and posing possible safety risks on the road. Our Cleveland trucking service providers are familiar with the old adage, “If the wheels aren’t turning, truckers aren’t earning,” and work to address these issues to improve efficiency and capacity and keep costs in check.
Loading dock times longer than a two hours is considered a substantial delay, and it’s become a common issue weighing heavily on the trucking industry the last several years.
reported that, on average, only 6.5 of the total 11 hours of drive time available under federal Hours of Service rules are spent actually driving. Much of the rest spent waiting to load and unload.
Working with a Cleveland trucking service with warehousing and logistics capabilities can help to identify which issues and individual suppliers/receivers pose the most driver detention risk and work to reduce those risks.
The concept of supply chain visibility wasn’t an issue many Northeast Ohio warehousing and logistics firms considered much until just the last couple decades. Supply chain visibility is the tracking of products or components from manufacturer to final destination and making this information readily available to all stakeholders, customer included, with the goal of strengthening and improving the supply chain.
Today, supply chain transparency is a top priority for logistics powerhouses, with top-level managers across a range of industries paying close attention.
Businesses are under increasingly intense pressure from consumers, governments, non-profits and other stakeholders to delivery goods in tact and on time – and to do so in a way that is considered responsible and sustainable from ecological and humanitarian standpoints.
However one feels about the politics of it, the ongoing trade war between the U.S. and China has invariably imposed significant burdens on stateside supply chains. Cleveland third-party logistics firms do our best to help insulate our clients from the economic impact – which for now shows little sign of abating – or at least find ways to help offset the costs.
The trade war began nearly one year ago with President Donald Trump imposing tariffs on $250 billion Chinese exports. Administration officials cited China’s alleged theft of U.S. intellectual property (mostly in the tech sector), as the primary catalyst, but also noted a desire to incentivize American companies to bring manufacturing jobs back to the U.S.
The Chinese government retaliated by increasing taxes on American exports and decreasing taxes on most every other country.
This escalation has dragged on for months, with a 15 percent tariff on another $112 billion worth of Chinese goods going into effect early next month, bringing two-thirds of goods imported by the U.S. from China under additional taxation. Another 15 percent tariff on $160 billion in goods is slated to go into effect in December. If that happens, almost all Chinese imports will be under tariff.
Sharply divided are conclusions about whether this will be effective in bringing back U.S. manufacturing jobs or curbing intellectual property theft. What we do know for certain is that companies in Ohio can’t bank on this simply blowing over. The stakes are too high. They must prepare.
Dialing in business growth solutions in Northeast Ohio rarely involves a single factor, but the strength of a company’s Cleveland supply chain strategies can’t be overlooked.
Simply put, the supply chain is the flow of goods and services both within and among companies, domestically and internationally. It usually begins with raw materials and manufacturing, then onto production, processing and packaging and then transport and distribution – though your firm may only deal directly with one or two aspects. What is often not so simple – especially when that chain crosses state and international borders – is the logistics.
Ensuring goods get from Point A to Point B intact and on time is the foundation of our entire business model. Logistics management is a $1 trillion dollar industry in the U.S. – and it’s still growing, thanks to e-commerce and advancing technology.
Ohio University analysis shows that in just in the last decade, supply chain management employment has spiked by more than 50 percent – and that’s because business leaders increasingly recognize the upper hand it affords. The Cleveland and Columbus regions are especially active hubs, thanks to their central physical location, population and industry density and access to various transportation modes.
Cleveland trucking companies expressed alarm about the plight of several truck drivers in recent months arrested on serious felony drug trafficking charges – for hauling federally-approved industrial hemp across state lines. Along with its oil extract, cannabidiol (CBD), hemp was declared legal by Congress with the passage of the 2018 U.S. Farm Bill.
To be clear, hemp and CBD are not the same substance as marijuana, which contains the psychoactive ingredient THC. Both hemp and marijuana are parts of the same cannabis plant, but neither hemp nor its CBD derivative contains more than trace amounts of THC (0.3 percent maximum by law).
Hemp is a versatile plant used for thousands of years as a food and fiber source. It was widely grown in the U.S. prior to WWII, until the government chose to strictly regulate it alongside marijuana. Hemp-derived CBD is purported to have a number of health benefits for a range of conditions, ranging from depression to rheumatoid arthritis to epilepsy.
The problem for trucking companies in Cleveland and throughout Northeast Ohio is that this change in federal statute did not automatically alter any state laws. States have been tackling it one-by-one, and some still have the old laws in place. That means truck drivers hauling hemp and CBD material through these states will remain at risk.
Here in Ohio, lawmakers passed a CBD/hemp bill, SB 57, about a week ago – more than six months after the 2018 Farm Bill went into effect. The measure aligns state and federal law.
Whether on a highway, an ocean freight or a customer’s doorstep, one key advantage of working with a Cleveland 3PL (third-party logistics company) is reducing the risk of liability – on several fronts.
How? A dependable Cleveland 3PL streamlines supply chains by reducing bottlenecks, constantly updating intermodal deliveries and preparing for exigencies with solid contingency plans. In taking on these responsibilities, our insurance assumes coverage for some of the risks our clients would otherwise have to burden alone.
That said, shippers/manufacturers are urged to carefully review their own liability insurance plans with a qualified agent to ensure their coverage is sufficient, but not excessive. Cargo insurance (land, marine, general) is not required of shippers, but it’s something for which many opt.
Although we can’t advise you on insurance, here’s what we can say:
At On Time Delivery and Warehouse, our committed Cleveland 3PL team strives daily to always provide the very best logistics services to our clients while also keeping our rates AND terms-of-service, fair, unambiguous and transparent.