Your supply chain is a complex system of moving parts. From manufacturing to distribution, wholesaler to the end consumer, your goods move across the globe via multiple modes on a daily basis. To accomplish this task efficiently, you may depend on third-party logistics providers to help navigate this complex system – or manage all aspects for you. When you're evaluating logistics partners, how do you determine which type is right for your business? Generally speaking, there are two different types of carriers – asset-based carrier and non-asset based carrier.
While all 3PLs strive to improve logistics operations, asset-based and non-asset-based providers each have unique methods or resources to help accomplish your goals.
In this blog post, we discuss the differences between asset-based logistics and non-asset based logistics companies.
Introducing the Goals of an Asset Based Carrier and Non-Asset Based Carriers
The supply chain and logistics field are supported by service providers that help you efficiently move freight across several modes of transportation. Generally speaking, these service providers can be divided into two specific categories; those who own the assets they use to move freight (asset-based carrier) and those who contract others (non-asset based carrier). Both types of supply chain support companies manage the logistics and supply chain functions for you.
Here are a few of the most important tasks all carriers aim to achieve:
- Increase the overall efficiency of your supply chain operations.
- Improve communication with customers.
- Reduce both soft costs (resources, time, and better business decisions) and hard costs (freight claims, accounting, and claims).
- Mitigate risk and decrease the potential of errors – while improving on-time delivery.
The primary difference between an asset-based carrier and a non-asset based carrier is in the way each accomplishes these goals. Let's dig a bit deeper by providing a general overview of each type of 3PL below.
What is an Asset-Based Carrier?
As explained above, an asset-based logistics provider is one who owns most or all of the assets (equipment and support resources) needed to operate your supply chain movement. Some of the assets needed for the smooth movement of commodities include several things. Warehouses, distribution centers, trucks, and containers are all examples of critical assets. While ownership comes with some benefits to help reduce the costs of your supply chain functions, it also represents some hurdles. The key is choosing an asset-based carrier that demonstrates their ability to efficiently move your freight.
What is a Non-Asset Based Carrier?
A non-asset-based logistics company does not own the assets. Instead, they either contract or sub-lease services with proven carriers to move your products. They also specialize in helping you save money by handling the more complicated tasks of freight movement. This includes negotiating superior contracts with each carrier, maintaining strong relationships with carriers, distribution centers, and warehouses while keeping them accountable for mistakes in billing and freight movement.
The main thing to remember is that each type of 3PL customizes a solution that fits your needs, helps you achieve your goals, and overcomes obstacles. A professional 3PL can help you determine which mode is best – and actually, manage all aspects of your freight movement.
Final Thoughts
Whether you're evaluating asset-based or non-asset-based logistics models, Redwood's Modern 4PL approach offers the flexibility to leverage both. For more than 15 years, we've been providing solutions for moving and managing freight through an open ecosystem model. We accomplish this with talented and motivated people, proven processes, and cutting-edge technologies.
If you have any questions about asset-based carrier services, reach out to us today!