When you are starting a third party logistics company, there are a lot of variables to consider. From freight broker software to drafting the operating agreement and more. But perhaps the most important is identifying the right people and companies to partner with to ensure your business is successful. It’s obvious that every broker or shipper ideally wants a carrier that delivers cargo on-time, at a reasonable price, and with very minimal damage. But as with most things in supply chain management, this is easier said than done. Developing a carrier network that meets all of your expectations can seem daunting, but with a little time and consistency, you’ll have the strong network you need to grow your business.
The following list will help you establish a valuable carrier network we all hope for.
1.Define Your Needs
Start by specifically defining what you need in a carrier. Create a document that outlines your current and forecasted needs. Do you need an LTL carrier? Dry vans or refrigerated trailers? How much space is necessary? What are your expectations for updates from their staff and from their drivers? It’s important to get as specific and granular as possible from the start, because as your business grows and your customer’s demands evolve, so too will the complexities of your carrier network.
2. Conduct Thorough Research
Once you’ve mapped out your specific needs you can begin the in-depth research process. Start with a few simple Google searches and compile a list of vendors with specific notes for each. You may also find referrals, listservs, and tradeshows useful research tools as well. You should also leverage referrals from industry contacts. If you know any carrier sales managers with 10+ years of experience they should know of reliable carriers in certain regions that over certain lanes, have certain inventory of trailers, or have certain reputations. Hiring an experienced carrier sales manager can be as good as vetting several carriers from a 3rd party source. If the carrier sales manager has good relationships, he will bring those into your business and can help you decide who’s most reliable for servicing your precious early customers.
3. Build & Maintain Good Relationships
Cultivating relationships is an essential part of owning and maintaining any successful business, but this is especially true for a logistics company. The very nature of a supply chain depends on strategic relationships and connections. Bad relationship management affects all areas of the supply chain and can easily impact performance. Which is why when you are developing a carrier network, it’s imperative that you establish good relationships from the get-go. Where do good relationships start? Honesty. When do good relationships turn ugly? Dishonesty. Whether it be human error on your part, the customer’s part or something is wrong due to weather related problems, the best way to keep good relationships with carriers is to be honest about them. Don’t assign blame or act like you’re Bobby Knight and the carrier is a redshirt freshman. Own up to mistakes and your carriers will appreciate the transparency with which you operate. Relationships are grown and destroyed with open and honest communication.
4. Listen & Establish Open Communication
This leads us to number 4 – The more available you are to discuss possible hiccups and listen to carriers’ feedback, the more opportunity you will have to improve. With an open line of communication, it not only ensures the carriers are happy but it also allows you to make minor adjustments to routes and weights, ultimately improving efficiency. Try adding an automatic feedback email that goes out after a load has been delivered. You might be surprised with what the feedback is that comes through. It might be hard to hear at times, but what’s important is that you take this feedback and use it as an opportunity to improve things. Otherwise, who knows how long the problem may go on for!
5. Pay Invoices On-Time
Maintaining good standing with your carriers should be obvious, it’s a simple and easy way to show that you value their services. Paying invoices promptly strengthens your relationship with carriers and helps to instill loyalty among both parties. Dilligence with cash-flow management is essential in order to make on-time payment an all-the-time reality. Don’t take this for granted, as delay in payment or non payment at all can land you in hot water, and blacklisted by the carrier at the very least. Defaulting on invoices is one of the quickest ways to end up completely out of business.
6. Network with Carriers & Drivers
Networking with carriers and drivers is a great way to ensure you continue to build your carrier network. You can do this both in person and online. Utilize social platforms like LinkedIn and Facebook to reach out to new people, share ideas and inform them about your business. If you remain dedicated to doing this on a regular basis, you will undoubtedly create a web of good relationships. Spend a little time one line making LinkedIn connections or contributing to certain message boards. It’s not just a phones-to-ears business like it used to be.
7. Use Technology to Your Advantage
As you already know, data is relied on heavily in the supply chain industry. Shippers depend on carriers to provide accurate, real-time data on their shipments. Without them, it would make their job a lot more difficult. In the same light, shippers should be willing to use technology that is available to increase transparency and ensure smooth data transfers.
Building a solid network of carriers takes time, consistency and dedication. Don’t expect miracles overnight. However, if you continue to stay invested in building good relationships and following the above recommendations, your network of carriers will expand.