It’s no secret that the logistics industry is a complex network made up of a vast number of players. For shippers, it can often be challenging to navigate and find the best transportation solutions to fit your needs. Ensuring timely and secure deliveries is paramount, but with countless carriers offering various services, choosing the right partner can be overwhelming.
Luckily, understanding the distinctions between asset-based brokers and traditional brokers can help you make informed decisions that optimize your supply chain.
Today, Zach Pappas, COO of Shaker Logistics, delves into the intricacies of asset-based brokerage, exploring what they are, their advantages, and challenges, how it compares to the traditional model, and how to choose the right option for your business.
What Is an Asset-Based Brokerage?
An asset-based brokerage is a unique logistics model that combines the capabilities of a trucking company with the services of a traditional broker. Unlike traditional brokerages that rely solely on a network of third-party carriers, asset-based brokerages also own and operate their own fleet of trucks. This means they have direct control over their equipment, drivers, and routes. By owning their assets, these companies can offer a higher level of service and reliability while also maintaining the flexibility to leverage external carriers when needed.
The Benefits of Asset-Based Brokerages
Asset-based brokerages offer several key advantages that set them apart from traditional brokerages, including:
- Guaranteed capacity: Asset-based brokers can ensure capacity by deploying their own fleet, even in regions with limited carrier availability. This reduces the impact of seasonality, offers protection from market disruptions, and provides consistent service.
- Flexibility: With direct control over their drivers and equipment, asset-based brokers can quickly scale operations up or down to meet fluctuating customer demands, ensuring efficient resource allocation.
- Quality control: By owning their fleet, asset-based brokers can implement and maintain higher standards for equipment and driver safety, resulting in improved service quality and reliability.
- Diverse service offerings: Many asset-based brokers offer a range of additional services, including warehousing, expedited freight, international ocean or air, and other value-added options, providing comprehensive logistics solutions for their clients.
How to Choose an Asset-Based Brokerage
Selecting the right asset-based brokerage is crucial for optimizing your supply chain. Consider these several key factors before deciding which partner is best for you.
Company Longevity and Financial Stability
A broker’s longevity in the industry is a strong indicator of its reliability and expertise. The logistics industry has a relatively low barrier to entry, making it possible for new companies to emerge quickly. Newer brokerages may lack the experience and resources to handle unexpected challenges or fluctuations in the market. Whereas partnering with a well-established asset-based broker ensures a proven track record of delivering consistent service and handling challenges effectively.
Insurance Coverage
Adequate insurance coverage is paramount when selecting an asset-based brokerage. While industry standards typically require a minimum level of cargo insurance, the specific needs of your business may necessitate higher coverage limits. Assess the brokerage’s insurance policies to ensure they align with the value of your shipments. A reputable asset-based broker will prioritize comprehensive insurance protection to safeguard your goods in transit.
Safety Record and Compliance
A strong safety record is essential for a reliable transportation partner. The Federal Motor Carrier Safety Administration (FMCSA) maintains safety ratings for carriers, providing valuable insights into a company’s performance. Prioritize asset-based brokers with excellent safety scores and a history of compliance with industry regulations. Additionally, investigate their driver screening and training processes to ensure a commitment to safety.
Staying Afloat of Challenges and Future Trends
The logistics industry is a dynamic landscape marked by ongoing challenges. While traditional hurdles like driver shortages, equipment maintenance, and capacity management persist, emerging threats like fraud and double brokering have become increasingly prevalent. Double brokering, the illegal practice of subcontracting a shipment without the shipper’s consent, undermines trust and jeopardizes supply chain integrity.
Luckily, asset-based brokerages offer a degree of protection against these challenges. By owning their fleet and maintaining direct control over operations, they can implement robust measures to prevent fraudulent activities.
Work With a Trusted Asset-Based Brokerage
Ready to experience the difference an asset-based brokerage can make for your business? Contact Shaker Logistics today to learn how our dedicated team and fleet of vehicles can optimize your supply chain and drive your success. Let’s partner to streamline your logistics and achieve your business goals.
Zach Pappas
COO, Shaker Logistics