What is the Difference Between Asset Based Logistics vs Non-Asset Based Logistics?
The supply chain is a complex system of moving parts. From manufacturing to distribution, wholesaler to end consumer, commodities, products, and supplies are moved across the globe via multiple modes on a daily basis. To accomplish this task efficiently, many shippers depend on third-party logistics providers to help them navigate this complex system – or manage all aspects for them. Generally speaking, there are two different types of logistics providers – asset based and non-asset based logistics companies.
While all 3PL’s strive to improve the logistics operations of their clients, asset based and non-asset-based providers all have unique methods or resources to help accomplish this task. In the next few paragraphs, we’ll begin to articulate the differences between asset based logistics and non-asset based logistics companies. This blog will be the first in a series that will provide you with details about asset and non-asset based providers, so you can make an informed decision as to which 3PL is best suited for your individual needs.
Introducing the Goals of Asset Based and Non-Asset Based Logistics Companies
The supply chain and logistics field are supported by service providers that help their clients efficiently move freight across several modes of transportation, through sea, air, and land, and across the globe daily. Generally speaking, these service providers can be divided into two specific categories; those who own the assets they use to move freight (asset based) and those who contract others (non-asset based). Both types of supply chain support companies manage the logistics and supply chain functions for their shipping clients – with similar goals top of mind:
- Increase the overall efficiency of their 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 and non-asset based logistics providers 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 Logistics Service?
As explained above, an asset-based logistics provider is one who owns most or all of the assets (equipment and support resources) that are needed to operate the supply chain movement for their clients. Some of the assets needed for the smooth movement of commodities including warehouses and distribution centers, trucks, containers, railway, ships, even air cargo. While ownership comes with some benefits to help reduce costs of their clients supply chain functions, it also represents some hurdles. The key is to choose an asset based logistics provider that has demonstrated (through their actions and service record) to efficiently move their clients freight.
What is a Non-Asset Based Logistics Service Provider?
The non-asset based logistics company does not own the asset. Instead, they either contract or sub-lease their service with proven carriers to move their client’s products. They also specialize in helping their clients save money by negotiating superior contracts with each carrier, maintain strong relationships with these 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 – asset-based and non-asset based will customize a solution that fits your needs, help you achieve your goals, and overcome objections. A professional 3PL can help you determine which mode is best – and actually, manage all aspects of your freight movement. Redwood Logistics recent acquisition by Redwood Logistics offers us the flexibility to expand our services – which now includes asset-based truckload logistics.
Chicago-based Redwood Logistics is a next generation, a strategically integrated logistics provider that believes every company’s needs are unique. For more than 15 years, the company has been providing solutions for moving and managing freight and sharing its knowledge across North America. Redwood Logistics is focused on making its customers more successful in their end markets by applying talented and motivated people, proven processes and cutting-edge technologies to optimize their supply chain management efforts.
If you have shipments that require multiple modes of transportation, or any questions about asset-based truckload shipping, give us a call today!