What Are The Perks of an Asset Based Carrier?

Today's supply chain is comprised of multiple independent parts that all work together to move commodities across the globe.

Facilities including warehouses, distribution centers and the carriers who move products between them often operate as independent contractors. When that is the case, these businesses are considered asset-based. Essentially, these are companies that own all of their own equipment, tools and trucks.

You may have read about the differences between asset and non-asset-based carriers and logistics companies in previous blogs and articles. But you haven't really seen a deep dive into explaining some of the reasons why shippers, manufacturers, or distributors should consider working with an asset-based carrier.

Well, in this blog post, you'll discover exactly why that matters!

Today, you'll learn exactly how an asset-based carrier is defined and what separates them from their non-asset based counterparts.

What is an Asset Based Carrier?

There are two types of businesses that operate within the supply chain.

There are asset-based companies and non-asset-based companies.

The main differentiating factor between the two is that an asset-based company owns all of its own equipment. This could be tools, trailers, storage facilities, or even entire fleets of trucks. The point is that they do not have to outsource equipment to fulfill freight orders for clients because they already own the equipment needed.

On the other hand, non-asset-based companies do not own their own equipment and generally outsource work in order to fulfill freight movements.

For comparison, the non-asset-based company is one that subcontracts individual entities or facilities to manage the supply chain operations for their clients. While the non-asset based business philosophy comes with some advantages, there are generally more potential hurdles that come with trusting your supply chain operations to non-asset-based carriers. As a whole, asset-based carriers are more consistent, reliable, and have better on-time delivery and service records.

Noted below are four reasons you should consider working with an asset-based carrier.

No Delays Finding the Right Resources

When a company owns the facilities and equipment they use to move or store freight, a client will never have to wait for the carrier to find the right equipment.

Non-asset businesses must search for facilities or services that meet the needs of this specific client. Straight to the point; this causes delays and uncertainty.

The asset carrier, on the other hand, can give you a solid yes or no answer instantly. If they do not have the proper resources available, the client can reach out to someone else. However, in most cases, the asset-based carrier will have the resources you need at the time you need it the most.

More Cost-Effective

A company that owns their equipment also has increased buying power or flexibility to establish competitive rates.

This same concept applies to asset-based carriers. Since they own their equipment, there is no additional upcharge or service fee for supplying clients with that equipment. Unfortunately, a non-asset-based carrier does not have this type of buying power or flexibility.

As such, working with an asset-based carrier is a much more cost-effective method overall for shippers.

Fewer Conflicts

One of the best reasons to consider an asset-based carrier is that all supply chain movements can be handled internally. This type of simplified logistics networking not only improves service commitment levels, saves clients' money, but also has fewer moving parts outside of control that can create conflict.

Case in point, in most non-asset-based movements, multiple independent contractors will be used throughout the process. If one of these contractors is not happy with the agreed-upon compensation, it can create delays and conflicts with the efficient movement of products. Asset-based carriers do not have this problem.

Final Thoughts

Asset-based carriers provide you with exceptional value, especially if you require 3PL services. They're able to customize solutions, with improved flexibility, lower prices, and fewer mistakes. If you're looking to partner with an asset-based carrier, explore Redwood's Modern 4PL approach to discover how asset-based logistics solutions can transform your supply chain.

FAQs

What is an asset-based carrier?

An asset-based carrier is a transportation company that owns the equipment it uses to move or store freight, such as trucks, trailers, storage facilities, or tools. Because it does not have to outsource those resources, it can usually control service more directly and respond faster to shipper needs.

How is an asset-based carrier different from a non-asset-based carrier?

The main difference is ownership of equipment. An asset-based carrier owns its own trucks, trailers, or facilities, while a non-asset-based carrier typically outsources those resources through subcontractors or outside providers. That distinction often affects speed, consistency, and how many parties are involved in each shipment.

Why do shippers choose an asset-based carrier?

Shippers choose an asset-based carrier because it can offer more consistent service, fewer moving parts, and less uncertainty in execution. Since the carrier controls its own equipment and operations, it can usually provide quicker answers on capacity and reduce delays caused by searching for outside resources.

Are asset-based carriers more cost-effective?

Yes, asset-based carriers can be more cost-effective because they own the equipment needed to move freight, which reduces the need for added outsourcing charges. Their ownership structure can also give them more flexibility in pricing and capacity decisions, which may help shippers avoid extra service fees tied to third-party resources.

Do asset-based carriers have fewer delays and conflicts?

Yes, asset-based carriers usually have fewer delays and conflicts because more of the freight movement is handled internally. When multiple independent contractors are not involved, there are fewer handoffs, fewer compensation disputes, and less risk of interruptions that can slow down product movement.

When should a company consider working with an asset-based carrier?

A company should consider an asset-based carrier when it wants more control, better service consistency, and a simpler logistics process. This can be especially useful for shippers, manufacturers, or distributors that need dependable freight movement and prefer fewer outside parties involved in the chain.

What kinds of equipment can an asset-based company own?

An asset-based company can own a range of operational equipment, including tools, trailers, storage facilities, and entire fleets of trucks. The key point is that it does not need to outsource the equipment required to fulfill freight orders, which gives it more direct control over execution.