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.
In previous blogs and articles, we have talked about the differences between asset and non-asset-based carriers and logistics companies. But we haven't really looked into explaining some of the reasons why shippers, manufacturers, or distributors should consider working with an asset-based carrier.
Well, in this blog post, we are going to tackle that!
Today, we are going to explain 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.
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.
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.
Asset-based carriers provide shippers and Those who require 3PL services exceptional value. They're able to customize solutions, with improved flexibility, lower prices, and fewer mistakes. For those who are looking to partner with an asset-based carrier, contact Redwood Logistics.