The pitfalls of having an Asset based capacity strategy

One of the most common trends I see in the industry is large shippers going away from non-asset carriers and using more asset based carriers. Spending the first 10 years of my career on the asset side and the last 10 on the non-asset side I think this is a dangerous approach.

If you are able to pull off this approach it will probably be with medium and large carriers. If you are able to execute this strategy how long will you see positive results? How long will it be before they start to dictate rates? If everyone pulls off this strategy how will capacity not be an issue considering this is the trend with most large shippers I talk to.

Medium and large shippers can only increase fleet size to a certain degree to satisfy customer demand. Chances are you probably don’t have smaller carriers melting your phones down to sell you their services. The best rates and service are with the smaller niche based carriers that I call “out and back” carriers with less than 100 trucks.

So how do you find those carriers that will minimize your rates and maximize your service? We currently have over 20,000 approved carriers under contract. Over 87% of our carriers have between 1 – 25 trucks. This “micro carrier” approach assures we can maximize leverage and provide best in class service. These carriers rely on us for backhauls and stay on our static customer lanes regardless of seasonality.

In addition we have over 200 carrier sales reps that work with these carriers to develop long-term partnerships. How often do asset based carriers turn down loads on you? As an Agency owner my load tender acceptance rate is 100%. I don’t turn down loads and guarantee pick up with 24 hour notice.

If you are currently employing an asset only strategy I would encourage you to look at the alternatives. There are different brokerage models out there that can help you meet your goals. I happen to believe that after 20 years in the business I finally have the best “mouse trap” to service customers as a business owner.