The Benefits of Outsourcing Your Logistics to a Freight Broker
This article originally appeared in the 2nd Quarter Issue of The Illinois Manufacturer
Manufacturers in the midwest have experienced tremendous upheaval in their supply chains since the advent of the COVID-19 pandemic. Truck and driver shortages, limited warehouse space, and shutdowns all along the supply chain have contributed to backlogs, service failures, continuing uncertainty, and skyrocketing rates.
The logistics industry is in a near-constant state of flux from new and emerging technologies to inclement weather events, not to mention ever-changing regulations that keep the most knowledgeable logisticians on their toes. If you’re not outsourcing some or all of your logistics needs, now is the time to reconsider if you want an added advantage over your competitors.
Outsourcing your logistics to a reliable third party logistics (3PL) provider or freight broker can provide you with consistent service, excellent carriers, and reliable rates.
3 Benefits of Outsourcing Your Logistics Services to an Experienced 3PL or Freight Broker.
Let’s take a closer look at three reasons midwestern manufacturers outsource logistics services.
A predictable freight budget.
An out-of-control freight budget can exponentially increase costs and cause financial losses you cannot afford. Unfortunately, the freight market is notoriously volatile as evidenced by the last two years. Inclement weather, new regulations (such as the Drug and Alcohol Clearinghouse), as well as a booming economy and the continuing driver shortage can run roughshod over your budget. When you outsource your logistics to an experienced freight broker with long-term relationships with a wide group of small to midsize carriers and access to predictive technology, you minimize your exposure to rate fluctuations and maximize your ability to keep your budget in check.
A scalable Transportation Management System (TMS) is essential for efficient and optimized logistics operations, but it’s costly and cumbersome to study, invest in, and implement. And most midwestern manufacturers simply do not have the time to implement this advanced technology to their advantage. However, an experienced 3PL can provide you with a flexible, secure, cloud-based system that offers custom data, an integrative portal, and DIY reporting that can move the needle in your logistics operations.
Sourcing carriers, negotiation contracts and changing government regulations increasingly expose midwestern manufacturers to unnecessary liabilities. If you’re not a logistics professional, you do not have the time or inclination to stay up-to-date on Hours of Service rules, ELD-compliance, or the ever-changing Drug and Alcohol Clearinghouse rules. Working with an experienced and knowledgeable freight broker mitigates your exposure to risk and excessive liabilities.
Navigating complexity, risk, and expense.
In the United States, 71% of goods are moved by trucks, and logistics operations continue to become more complex and expensive. In a recent report, Armstrong and Associates reported that 90% of Domestic Fortune 500 companies are relying on 3PLs or freight brokers for outsourced logistics services. It’s unfortunate that larger companies are more likely to partner with 3PLs because the benefits to smaller manufacturers may be even greater than those conferred to their larger counterparts.
The recent pandemic has been hard on midwestern manufacturers forcing many to close their doors. Many of the companies that have managed to navigate this disruption have relied on outsourced logistics services to mitigate risk and ensure stability in an ever-shifting transportation landscape.