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By Richard Knee, Special to Transport Topics

This story appears in the June 4 print edition of Transport Topics.

When shippers search for the right carrier to transport their goods, price is often just one of their considerations, according to industry experts and trucking executives. Equally important, they say, is a fleet’s ability to provide services such as warehouse management, just-in -time delivery and the use of third-party logistics operations, among others.

“Some shippers have an outside logistics person in their warehouse. That’s a big change in the transportation function from what it was 10 or 20 years ago,” said Peter Gatti, executive vice president of the National Industrial Transportation League, Arlington, Va. “You see the [package-delivery companies] operating as [logistics] functionaries within the customers’ facilities.”

A big advantage in using 3PLs is their combined, multi-customer volumes give them transportation pricing leverage, Gatti said.

Chris Burroughs, a spokesman for the Transportation Intermediaries Association, Alexandria, Va., cited another reason for using 3PLs: “Access to equipment fleets that [carriers] might not otherwise have the time and resources to find themselves. With thousands of fleets to draw from, a good broker can provide more equipment and different modes of transportation much faster than a single carrier.”

He also said, “Efficiency and costs are the criteria you look at when choosing a 3PL — the quality of service and the cost of that service.”

Specific services that best suit a shipper “can vary with the supply chain that you have,” Burroughs said. Whether a shipper or receiver requires just-in-time delivery or uses a warehouse can be a major factor, he added.

Carriers also said that whatever services shippers require should be tailored to the needs of both parties and provide some degree of predictability for customers and fleets.

“Never develop a price and service solution until you clearly understand what the customer needs. Ask customers directly, ‘How often would you like to see us?’ ” said Geoff Muessig, chief marketing officer and executive vice president of Pitt Ohio, which ranks No. 65 on the Transport Topics Top 100 list of for-hire carriers in the United States and Canada.

“A lot depends on where you are in the sales cycle,” Muessig said. “If something has changed with [the customer] or if something has changed with us, it’s time to sit down and have a conversation” about those changes.

Tailoring a transportation or logistics service package isn’t always easy because forecasting cargo flow is difficult for some shippers, especially in the agricultural sector.

“The volatility of our supply is really interesting,” said John Pandol, director of special projects for Pandol Bros., a Delano, Calif.-based grower of table grapes and stone fruits. Predictability, of course, would make life easier, but “Mother Nature just doesn’t work that way,” he said.

About 90% of Pandol Bros.’ volume “is contracted by the buy side through third parties or the transportation division of a supermarket,” he said. For the remaining 10%, the company deals mostly on the spot market with refrigerated truck brokers, he said.

Pandol Bros. has one “fairly stable” account involving a forward distributor that holds product for delivery to its own customers, who want “daily deliveries of fairly small amounts,” Pandol said.

The same is true when picking a warehouse/distribution center operator.

“To the degree they overlap — warehouses with trucking operations and trucking companies with warehouse operations — I would imagine there is little difference in what their customers generally consider as criteria for picking any such supplier: experience, expertise and capabilities, and cost,” said David Sparkman, a spokesman for the International Warehouse Logistics Association, Alexandria, Va.

Dave Howland, vice president of land transport services for APL Logistics, said his company “will always attempt to work with the customer to provide the direction that will give the customer the best value for its transportation spend. That is why we offer management services [that can include things such as ironing garments] as well as the underlying transportation service with truck, rail, ocean and air. The underlying service can come from us or our competitors, depending on the shippers’ needs.”

APL Logistics, based in Scottsdale, Ariz., ranks No. 15 on the Transport Topics Top 50 list of the largest logistics companies in the United States, Canada and Mexico.

Many shippers and receivers don’t do enough homework when choosing service providers, said Jeffrey Tucker, chief executive officer of Tucker Co. Worldwide Inc., a domestic and international logistics and freight broker based in Cherry Hill, N.J.

“Neither carriers nor non-asset-based service providers are created equal,” Tucker said. “Unfortunately, we have rarely met a corporate procurement department that hasn’t thought otherwise.

“U.S. corporations, especially publicly traded ones, must better understand who and what existing and potential business partners actually are, and what skills and services they provide,” he said.

“The typical corporation has a [key performance indicator] or other mandate to send out [requests for proposals] regularly,” Tucker said.

“The process is rushed, haphazard, and starts behind schedule. Little research, dialogue or mutual understanding is present between parties. It’s a typical ‘git ’er done’ exercise in futility.”

He explained: “To illustrate just how extreme the differences are between providers, consider this: Our firm rejects — refuses to use — nearly 70% of motor carriers who wish to haul freight for our customers, based on contract details, insurance, compliance data or safety data. That’s before we even talk price.

“Yet to nearly every professional procurement department, they’d see the same potential suitors as essentially equal and want to see where the pricing fleshed out,” Tucker said.

QualifiedCarriers.com, a Web-based service enabling shippers and receivers to monitor truckers’ compliance with U.S. Department of Transportation safety regulations, “states that nearly 10% of the motor carriers entered into its system . . . are not, in fact, carriers at all. This is valuable news to the shipper,” Tucker said.

“Companies must use procurement departments only after professional transportation and logistics departments do a solid job of evaluating service providers more thoroughly,” he said. “Providers should be screened for insurance limits, basic DOT compliance data, safety rating for motor carriers and the current — not potential — ability to comply with all of the shipper’s corporate governance.”

“Shippers would be well-served to ask what the broker’s minimum

fitness-for-use standards are when selecting a carrier. Written industry model contracts exist and should be used between either shipper [and] carrier or shipper [and] broker — two very different contracts,” Tucker said. “Transportation departments — the folks who must live with the procured services — must know precisely which existing providers and potential ones meet the requirements, and exclude those who don’t.”

Tucker said he recommends using brokers and carriers that belong to trade associations, such as TIA and American Trucking Associations, which promote high ethical, regulatory and contractual standards.

Shippers and receivers also should check references and talk with businesses within their own industry.

IWLA, TIA and NITL all offer best-practices guidelines for their members. NITL’s guidelines are the product of a cooperative effort with ATA and are being updated, Gatti said, adding that the new edition should be available by this summer.

Relations between truckers and 3PLs are mostly cordial, notwithstanding whatever competition exists between them, execs on both sides of the coin said. Back-soliciting by one another’s customers rarely occurs, they said.

“We value our relationship” with third-party logistics providers, Muessig said. “We are seeking strategic relationships with 3PLs instead of transactional ones. We’ve got to create value for all three,” he said, referring to the shipper or receiver, the intermediary and Pitt Ohio. “We would never back-solicit them.”

Trucking companies must be prepared to decide which 3PLs will and will not be a good fit toward creating value for all the parties, Muessig said.

“We have seen carriers back-solicit intermediaries, but it usually hurts them in the long run,” said APL’s Howland. “Not only will that player not use them, going forward, [but] it tends to be a tighter group of players than one would think, and word gets around fast on any carrier who isn’t trustworthy. They also tend to have very long memories.”

Chip Smith, chief operating officer of Bay and Bay Transportation a provider of transportation and logistics services in Rosemount, Minn., agreed.

“Carriers rarely back-solicit a broker or 3PL. Every carrier needs help from a broker to get their equipment loaded from time to time,” Smith said.

“Carriers would have a difficult time finding a broker or 3PL willing to work with them if they had a reputation for back-soliciting customers,” Smith said.

“Brokers and 3PLs enter into agreements with shippers to handle a specific volume of freight. They may utilize hundreds of carriers to serve a single shipper because the carriers may have only sporadic availability for those shipments,” he added.

“Shippers do not have the time to deal with multitudes of carriers only as they are available,” said Smith, a member of the TIA board of directors. “They want predictable capacity and quality service. It is the brokers’ [or] 3PL’s job to provide this, regardless of how many or which carriers they use to get the job done.

“Carriers may not have enough consistent capacity to serve a shipper, and a broker may be their only way to access a given shipper’s freight,” Smith said. “Brokers [and] 3PLs also offer modal options and can bundle services.”

Pitt Ohio recently announced that it has added an express service that will make deliveries in two to three business days from mid-Atlantic and Midwest service areas to urban centers in California, Arizona and Nevada. Also, Miami-based Ryder System Inc. said it would provide warehouse management and last-mile delivery services for ColdTech Commercial, a commercial refrigeration manufacturer based in Findlay, Ohio (5-14, p. 16).