What are Asset or Non Asset-Based Carrier Types?
Knowing what class and mode of transport your freight fall under is important, sure. But do you do the core differences between all carriers?
See, while all carriers do essentially the same thing, they do not all operate the same way. In fact, you can even break all carriers up into just 2 groups; asset-based carriers and non-asset-based carriers. Knowing the difference between these two groups can unlock the hidden potential of the carrier type that you may have overlooked previously.
Additionally, selecting the right type of carrier can save you a significant amount of money in the long run.
But the only way to leverage the power of these carrier types is by understanding the differences between them. Only then can you make a decision based on what value they bring to the table.
To help speed up the process, we’re going to talk a bit about those differences in this blog post.
Get your thinking caps on, load up your CMS, and let’s get rolling…
What is an Asset-Based Carrier?
Straight to the point… asset-based carriers own their own equipment. They do not rent the trucks, tools, or equipment that they use for any haul.
This concept is akin to an asset-based trucking company that owns all their own trucks. The difference here is that the term “carrier” denotes more than just a trucking company. Carriers generally provide other supply chain services aside from their fleet of trucks. Most carriers also own containers, warehouses, and large equipment. Many even have in-house employees who complete a variety of other tasks such as packaging, storage, inventory control, and daily shipping and receiving tasks.
The asset-based carrier is typically regarded as a full-service sort of endeavor. They not only handle their clients’ supply chain movement and storage but use their own equipment to accomplish those tasks.
In most cases, an asset-based carrier is able to save their clients a ton of money. They are able to do this because they have no extra overhead fees involved as they don’t need to subcontract work or lease any equipment.
What is a Brokerage or Non-Asset Based Carrier?
Equally as straight to the point… non-asset-based carriers do not own their own equipment. This type of carrier may partner with subcontractors, lease equipment and configure custom warehousing needs.
Now, we know what you are thinking. What is the point of working with a carrier that simply acts as a 3PL?
And we hear you, but non-asset-based carriers offer something that an asset-based carrier typically doesn’t. What is that one thing, you ask? Flexibility.
By being able to tap into a network of various partners, this type of carrier can connect you with the right partners. Partners who may be more tailored to perform the job than the team over at the asset-based carrier company.
Furthermore, since there is more flexibility, you have a little bit of wiggle room when it comes to finding the best rates.
How to Determine Which is Best for You
There are some shippers that swear by working with asset-based companies. Others prefer the brokerage firms.
The reality is, choosing between an asset-based or a brokerage carrier does not have to be a black or white decision. In fact, the best and most robust carrier services have the flexibility to offer their clients the best of both worlds to some extent.
Here is a real-world example…
Let’s say that company “A” hires a third-party logistics company to warehouse, ship and receive, inventory, pack and ship all their online merchandise sold through their online storefront. In this situation, the customer could probably save money by working with an asset-based carrier, mainly since there is no upcharge or management fee to provide services when the company owns all the assets.
The other side of company A’s business is shipping products from the United States into Canada. In order to get the best rates on shipping, it is determined to use a brokerage carrier that manages an intermodal shipping platform. Freight is trucked from the warehouse, loaded onto a railway network, and finally trucked to the point of delivery.
In this situation, it simply makes sense to subcontract the railway and 3rd party trucking companies in two different countries.
The key to saving money on your supply chain movements is partnering with a third-party logistics company that has the ability to offer both an asset and non-asset carrier services. As a matter of fact, this is something that we pride ourselves on here at Redwood; diversity and flexibility
Redwood Logistics has multiple asset-based divisions, and likewise partners with non-asset carriers. This provides us the flexibility to custom configure a supply chain solution for every type of client, regardless of their shipping platform, size, or volume of shipping.
If you are planning your fiscal budgets for 2020 and would like to speak with a proven 3rd party logistics company that offers both asset and non-asset carrier services, contact Redwood Logistics today.