Finding Your Service Level
"Finding Your Service Level" in freight service providing takes thought and planning. Thought and planning may sound like the same thing, but they are not even close when building a service level. Thought involves considering all the elements of service in a service level. Freight Transportation has changed immensely in the last forty years. Even 20 years ago the freight industry looked like three levels of Service Providers were Independents, Small Businesses, and Corporations. A better way of thinking of was Independent, Freight Forwarder, and Carrier. If you spoke to someone in the industry their answer might have been Independent, Freight Broker, Freight Forwarder, and Carrier. 20 years ago, I saw the industry this way while I was in Freight Sales as an Account Manager for S.A.R. Logistics in St. Louis, Missouri, USA which was a franchised office of Service By Air (SBA Global Logistics Services) a 100-million-dollar operation. There was this new thing called Third Party Logistics Company (3pl) that I kept competing against. I had an established "Book of Freight" my customer list included names like United Vanlines (Unigroup-Last Mile), TricorBraun, Group360, Flexible Packaging, American Eagle, and Thayer Aerospace (NextGen Aerospace). SBA Global Logistics Services was a Freight Forwarder that was one of the three largest Freight Forwarders. SBA was not a Direct Carrier like the Commercial Airlines, UPS, DHL, Forward Air, Airborne, FedEx. Here is where things get strange for the outside customer. SBA Global was not a Direct Carrier; however, the business entity had agents like Highways and Skyways (Larry Widlowski and David Scinta) that had their own equipment. Independent Agents ran secondary entities that provided services to the corporation. I once chartered a helicopter from David Scinta of Highways and Skyways for Prince William to get to Scott Airforce Base.
Charters are a different level of service that is the start of being a Direct Air Carrier. It's time to list out the service structure again. At this point it depends on who you talk to as to how the freight pyramid is structured. There is an addition of the Fourth Party Logistics Company (4PL) and now there is a Fifth Party Logistics Company (5PL).
example: http://www.4plcsd.de
Actors Services
Cargo Owner 1PL Manufacturers, Wholesale, retail
Carriers 2PL Transportation
Logistics Service Providers 3PL Logistics
Lead logistics Providers & 4PL Supply Chain Management
Consultant
Third Party Logistics (3PL) - Which refers to companies that provide outsources logistics services, including warehousing, order fulfillment, and transportation. These partners help businesses streamline their supply chain operations, reduce costs, and improved efficiency. Unlike drop shipping, where orders are proceeded only after a customer purchase, 3PL companies maintain inventory to fulfill orders.
Fourth Party Logistics (4PL) - Which is a model of logistics outsourcing that goes beyond traditional third-party logistics (3PL). In a 4PL arrangement, a single external provider manages and optimizes the entire supply chain for a company, overseeing all logistics and supply chain functions. This strategic evolution allows businesses to focus on their core competencies while relying on the 4PL provider for comprehensive supply chain management.
If you have chosen the type of entity you are utilizing to provide the service, it's time to determine the core services the company will provide. Will your company provide the full array of shipping modes or will the company concentrate on a single form of transportation. It is important to know if you will be a 2PL (Broker, Freight Forwarder), 3PL, or 4PL. Most 3PL and 4PL's outsource at least a portion of the services provided if they are themselves an asset based (Own their own equipment) company. Non-Asset Based companies own no equipment; the company just processes orders and processes billing. If your company is the Agent or Cartage Agent, the company may only handle the Pick-up or Delivery order. Most Agents or Cartage Agents, drop the days freight to the Direct Carrier for the over the road, air, rail, or ocean service to be performed. Agents and Cartage Agents, provide services to 2PL, 3PL and 4PL's. Will your company provide full array of cartage services or just dock to dock or door to door.
Some people are confused about what a Carrier is compared to a Cartage Agent. Most companies consider a Cartage Agent as a service provider that performs pick-ups or deliveries of freight within 150 miles of the terminal. Cartage Agents are generally the Straight Truck operators (26-foot Box Trucks). The Cartage Agent provides a fleet of Straight Trucks to perform local delivery services. The Cartage Agents are utilized to ease the stress of taking 53-foot trucks into close quarter turns and height restricted areas. The Cartage Agents may provide Door to Door and Final Mile Services upon request. The freight arrives to the terminal by Common Carrier or Independent Service Providers and the delivered from the terminal. The pick-up performed to be shipped as directed per customer instructions by consigning the freight to a carrier. A carrier is the Feeder Service Provider, Common Carrier, or Independent Carrier. The Carrier provides services 35 miles and beyond to the 2PL, 3PL or 4PL.
The Carrier offering services to 2PL,3PL, and 4PL's have to decide the services they will provide. Driver No Touch, Split Load, Drag and Drop, Oversized, tarped, drop deck, Intermodal, Intramodal, exclusive Use Vehicle, Truck Load, and Less-Than-Truck Load. This often is where the Freight Broker and Freight Forwarders are found. The Carrier provides daily service to set destinations. The daily services are often called "Lane Segments." St. Louis to Chicago overnight, St. Louis to Kansas City Overnight, St. Louis to Nashville and Knoxville overnight, St. Louis to Springfield, Illinois daily, St. Louis to Springfield, Missouri daily and St. Louis to Joplin, Missouri overnight. If Split-Load service is offered the truck has multiple stops on a designated route or varying stops along the Lane Segment. Driver-No-Touch means the driver simply opens the doors and backs in and the truck is a Live Load or Live Unload while they wait. Drag- N-Drop is when the trailer is empty or full and the driver unhooks from a trailer and takes the trailer at the facility after re-hooking to the trailer to be hauled ("The Hook-N-Pull"). The "Hook and Pull" is a "Bobtail Tractor," "Dead Heading" to get the load. "Finding Your Service" is deciding what services are you want to provide to your customers, before making a business plan or organizing the company having an idea of what the company's direction is going to be when open.
By Darren Dwayne Frazier
By Highland Productions LLC