Logistics carriers are individuals or organizations that transport freight from one point to another. Carrier logistics is an extremely important part of the supply chain that connects manufacturers to distribution centers and companies’ products to customers.
Depending on which carrier type you choose to connect your supply chain, you will be able to enjoy specific benefits that each carrier provides such as specialized service or negotiable rates. It’s helpful to know what carrier options are available to help you scale your shipping logistics as cost-effectively as possible.
What does a carrier do?
A carrier ensures your freight is transported to its destination safely using the most time and cost-efficient route possible. There are many transportation modes in which carriers operate, including: air, sea, rail, or road. Even though there are many transportation modes to choose from, not every business will need to utilize every mode. Many businesses utilize over-the-road (OTR) shipping to transport goods domestically. While there are challenges that come with transporting freight over-the-road, an experienced carrier can help your organization easily transport your freight safely and at scale.
Two types of carriers in logistics
There are two types of carriers that are used most often in freight logistics—common carriers and contract carriers. Certain companies may operate as both carrier types. The decision to use one carrier type over the other depends on the unique needs of your business. Here’s what you need to know about each carrier type:
1. Common carrier
The first of two types of carriers in logistics are common carriers. Common carriers are private or public companies that are tasked with transporting freight or goods. Common carriers offer their freight services to the general public and businesses. Common carriers are more accessible as they must work with any person or business that is willing to contract them and pay for the carrier’s services.
2. Contract carrier
Contract carriers are private for-hire carriers that offer truck transportation to specific individuals and businesses based on contracts. Contact carriers are often contracted by companies to partner for an agreed-upon timeframe with more flexible agreements that can be terminated or negotiated as-needed by either party.
Which type of carrier is best?
Your company’s structure, shipping volume, and priorities often influence which type of logistics carrier you choose. Companies shipping high volumes or requiring specialists to deliver certain goods (oil, gas, medical, hazardous materials) may find that contracting a freight carrier may be the best fit. Companies looking to send smaller volumes of freight or one-off shipments may find more cost flexibility by utilizing common carriers.
The benefits of using common carriers include:
- flexibility to choose different shipping modes to suit individual shipments
- potential savings contracting freight on an as-needed basis
The benefits of using a contract carrier include:
- specialized experience with certain freight classes
- locked in rates for a designated timeframe
How do carriers determine rates?
Whether you’re considering a contract or just quoting a single shipment, you’ll want to understand how carriers determine their rates. Rates to haul freight are often set based on a host of factors such as freight mode, seasonality, and fuel costs.
A carrier’s rates are determined in part by the freight mode you choose. When choosing to haul freight over-the-road (OTR), there are several modes you can choose from:
- Truckload (TL): A shipper requiring an entire truck’s space will utilize this freight mode. Shipments over 40 feet long usually require a truckload. TL freight may also require special handling as the items shipped may be fragile and need to be handled with care by the carrier. Generally, this is the most expensive mode.
- Less Than Truckload (LTL): This freight mode is used to ship loads that are not large enough to require their own truck or whose delivery isn’t time sensitive. LTL combines multiple shipments onto one truck and travels via a hub-and-spoke route which may include truck transfers, driver swaps, or both. LTL shipments are less than 12 feet in length and less than 7,500 lbs.
- Partial Truckload (PTL): Shipments that are larger than LTL but still smaller than a truckload may be classified as PTL. The size of partial loads can vary between 5,000-40,000 lbs and 10-28 linear feet. While not a common shipping mode, PTL is usually a straight shot—meaning the same truck which picks up a shipment is the same one that’s going to deliver it
- Shared Truckload (STL): A shared truckload is where two or more shippers share the space on a truck to ship freight via one optimized, multi-stop route. STL freight is typically less than 36,000 lbs and between 8-44 linear feet in length, and shipments travel on one truck with one driver all the way to their destination with no transloading. This results in fewer delays and less damage than traditional LTL.
The right mode for your load may be different for each shipment, or it may be the same. If your company consistently requires freight to be shipped full truckload, you could find savings with a contract carrier.
The time of year shippers choose to move freight is another one of the factors logistics carriers use to set rates. Freight shipping reaches a peak during the months of August and October due to the beginning of the school year and various holidays such as Halloween and early Christmas shopping. If you’re looking to ship or haul a large load, be aware that freight rates may be higher during this time of year.
Origin, destination, and distance
A third factor that plays a pivotal role in how carriers in logistics determine rates is the origin, destination, and distance a shipment must travel before arriving at its destination. Routes that involve longer distances, deliver in rural areas, or involve multiple stops and transfers may contribute to higher rates.
Fuel costs and the amount of fuel needed to move a truckload are of course a large factor in determining freight rates. Carriers traveling shorter, optimized routes with fewer stops can lower the amount of fuel needed and haul loads more cost-effectively.
Weight is one of the factors used—along with an item’s ease of handling, value, length, height, density, and liability—to determine an item’s freight class. NMFC (National Motor Freight Classification) is a shipping industry standard that categorizes freight into groups to help determine the shipping cost of a piece of freight.
One of the final factors that influence freight rates is the urgency to get a shipment to its destination. Faster shipments may increase customer satisfaction, but they also require extra effort and dedicated truck space (and possibly even an extra driver or two) which leads to higher costs. Having a flexible delivery timeline instead of rushed shipments could help you lower costs.
How to choose a logistics carrier
Choosing the right partner to facilitate your carrier logistics can be challenging. While some businesses may have the resources to build relationships with carriers directly, others may not. Here are a few options to help you connect with carriers for your next shipment:
Freight brokers act as the go-between or middleman between shippers and carriers. Finding a carrier in logistics can be challenging and time consuming so it makes sense that some companies tap a broker to assist. Freight brokers handle the nitty gritty details involved in a shipment including all paperwork and communication with the carrier.
A few of the advantages to working with freight brokers include:
- better connections to carriers who are capable of meeting tough shipping timetables
- increased access to more carriers via a broker’s network
- easier access to many carriers can help businesses scale to serve more areas
- improved efficiency when shippers are no longer required to directly manage contracting carriers
However, some drawbacks may include:
- poor communication between shipper, broker, and/or carriers
- loss of some control over your shipping process
- hidden fees
- lack of supply chain visibility
The quality and reputability of freight brokers can vary. Just like with any partner, communications and expectations should be clear to ensure all your freight needs are being met. Before deciding on using a particular freight broker (if at all) it’s important for you to do your due diligence and research how dependable and capable the broker may be.
A third-party logistics company (3PL) can manage many aspects of logistics, including freight management. Companies may choose to work with a 3PL if they are already outsourcing other aspects of their logistics process. Typically, 3PL companies work with companies on a longer-term basis than freight brokers who may just have a short-term, one-off contract.
Some common advantages of working with a 3PL include:
- access to newer logistics technology and reputable carriers that may not otherwise be accessible
- more time available to devote to other business operations
- ability to reach new markets or quickly scale
However, a few drawbacks include:
- large startup costs to begin the partnership
- some loss of control over your company image and customer service
Better than a broker, Flock Freight is a technology company that’s creating a smarter, more sustainable supply chain. Flock’s patented technology finds and fills trucks’ empty spaces so shippers can save money, carriers can earn more money, and goods move terminal-free with more accuracy and fewer emissions. Use our self-service platform to quickly generate a quote that meets your exact freight needs, and then match with vetted carriers that adhere to your standards.
Advantages of working with Flock Freight include:
- access to proprietary shared truckload service that moves goods terminal-free with reduced damage
- ability to match with vetted carriers based on your load requirements
- reduced time spent coordinating shipments
Learn more about shipping with Flock Freight today.