RFX Blog

Shipper Focus Group Offers Insight for 3PLs: Part 1 of 2

May 27th, 2015

Credit Note: Much of this article comes from a document produced by the Transportation Intermediaries Association entitled “TIA Shipper Focus Group: Summary of Highlights.” The information published on this website is done so with permission from TIA.

TIA held a focus group meeting during the National Shippers Strategic Transportation Council (NASSTRAC) conference earlier this week.  The group consisted of seven transportation managers or higher in their respective companies. Discussions inside the group consisted of three areas of their business:

1. Do they currently work with brokers / 3PLs to handle their traffic? If not, why?

2. Do they have a preference for doing business with an asset-based 3PL? If so, why or why not?

3. What kind of services do they want from 3PL service providers?

Generally speaking, most use brokers to some extent but are cautious based on their specific needs, whether it be service levels, special equipment requirements, short-term last-minute needs or failures by their carriers to meet commitments. The usual objections such as late deliveries, failure to make pickups, mismatching expectations, drivers falling off a load or changes in quoted rates were expressed and often made the relationships with 3PLs strained.

Interestingly enough, there was a sense that even though there were some restrictions and limitations on using brokers, there certainly is a need to do so even though the spot market has been affected by capacity. Most of the shippers want more involvement with 3PLs but need less transactional and more impactful service levels to be considered valuable.

The group considered the use of special services a priority; i.e. load bars for every load, e-tracking trailers or the use of special trailer equipment.

When asked about the broker bond limit or high value cargo insurance as a factor in using or not using 3PLs, most in the group did not care. However, they feel it was important that somebody ensure that the carriers in which the loads were tendered had adequate insurance limits.  While the members of the group were indifferent about the bond requirements, brokers that exceeded the minimum bond requirement, brokers with $100,000 or $250,000, they felt had more “skin in the game” and would be more likely to give these brokers their business.

There is a perception among the group that the biggest reason for NOT using a transportation broker or 3PL is that transportation costs are higher when using an intermediary. While rates are often expressed as the dominant buying motive, the focus group stated that they were willing to pay more for better and more dependable service when they “are in trouble.” Price is not always the deciding factor.

One manager sends a monthly newsletter to the executive branch of her company explaining what was going on in the transportation marketplace over the last 30 days to keep them abreast of some of the reasons she finds it necessary to make  exceptions when going outside of their core carrier-base or using a 3PL. She says this communication alone helps her get her budget requests approved, keeps her finance department at bay and lets her use 3PLs or carriers that give her the levels of service that her company requires, especially at month end when her distribution centers must be cleared of all inventory.

Next week, Part 2 will explore Broker “Do’s and Don’ts” as well as shipper annoyances, objections and areas of concern that were expressed in this focus group.

Posted on May 27th, 2015 in business strategy