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The Real Cost of Using the Lowest Cost Carrier

by Deb Meester, Director of Sales, ATS, Inc. on

After all you’ve been through in 2020, you’d probably do just about anything to see life go “back to normal.” It’s safe to say we’ll establish a “new normal” at least in the short term. Transportation challenges will likely arise that you haven’t seen before — or at least not to this degree. Pressure on carriers struggling to survive will intensify, driving rates downward initially to be the lowest cost carrier. As a result, carriers and Drivers will leave the market. Shippers working with their same transportation partners will likely be able to receive the same service at much lower rates temporarily. And then, at some point the downturn will lead to a recovery where truck capacity will become scarce and rates will rise. Undoubtedly, as our economy slowly begins to reopen, shippers will feel more pressure than ever to keep pricing down to save costs as they try to return to profitability. For many of you, that will include either adding or changing transportation providers.

Logistics professionals should consider much more than just the lowest cost carrier when choosing a shipping partner. Bear in mind, they will be feeling the pinch too and some will be forced to make tough choices, like using older equipment, hiring less qualified drivers, focusing less on safety or cutting resources to their drivers. If you’re not careful, these decisions could end up negatively impacting your bottom line. A single shipment could end up costing you much more in the end, not only in hard costs, but in customer satisfaction and company reputation.

Following is a list of considerations to keep in mind as you choose an effective third-party logistics provider:

Overhead & Infrastructure Considerations

  • Are they financially stable, ensuring they will be here for me both now and in the future?
  • Can this carrier quickly accommodate my unexpected shipments in this new norm?
  • Do they have the facilities necessary to handle my overflow freight?
  • Do they have trailer yards and assets located in places that can get capacity to me in a timely manner?
  • Do they have high turnover?

Equipment Condition

  • How old is their equipment? Is it still reliable?
  • What’s the carrier’s philosophy on performing routine maintenance?
    • Do they repair only when problems arise?
    • Is my delivery schedule flexible if my freight happens to be on the trailer when that happens?
  • Do they have additional equipment like blanket or pad wrap for added protection of my freight?
  • Do they have enough straps to tie freight down properly?

Technology/Shipment Tracking & Service

  • Does the carrier have 24/7 tracking or a portal (including mobile accessibility)?
    • Does it provide me access to my load’s location and the necessary documentation?
  • Do they provide me a dedicated point-of-contact in the event that I have a question?
  • What technologies do they use to keep the driver, my freight, the public and my company’s reputation safe and sound?
  • Will they provide details on the systems they use to protect life and my freight?

Experienced, Professional Drivers

  • What measures does this carrier take to retain their Drivers in and out of crises situations, ensuring service consistent service for me?
    • What is the average tenure of their drivers?
  • Being the lowest cost provider almost always means paying the driver less, making it more difficult to attract and retain high quality, experienced drivers.

Track Record/Risk Mitigation/Responsiveness

  • What is this carrier’s track record for on-time delivery?
  • Where is their nearest truck?
    • Does their network match my needs or might they struggle to execute?
    • Are they willing to provide us a map of their network?
  • What experience and training does the driver have in securing high-value cargo?
  • Do they have in-house resources, a seasoned network of relationships and technology to map the best route and fulfill potential permit requirements efficiently?
  • Are they willing to provide references?
  • What do my industry peers and associations have to say about them?
  • Does their website/online reviews make me feel confident they can do the job?

After weighing all of these factors, only then can you determine the value you’ll receive for the price.

About the Author – Deb Meester is the Director of Sales for ATS, Inc., the Vans asset fleet at Anderson Trucking Service. She engages her years of leadership experience and the ATS Vans fleet of more than 600 company-owned trucks to help her team provide innovative transportation solutions and network connections to shippers nationwide. Deb also plays a critical role in championing efforts to enhance the ATS customer experience through the advancement of customer-centric processes and technologies throughout the company.