Why Carrier Compliance is Important to your Company
If you were to think of a word that characterizes the shipping industry in recent years, what would it be? There are many things which have been true of the Logistics and Shipping Industry through the past couple decades but one area has been especially punctuated in recent years – Growth.
Ecommerce and Globalization has created growth in the supply chain never before seen in shipping history. More product is being shipped on an annual basis and approximately 25% of the world’s GDP is being exported around the world. Companies in the 21st century enjoy virtually unlimited opportunities for business development.
The majority of shippers work with multiple carriers for the different benefits each carrier provides the company. Having a wide network of carriers is a great benefit for shippers depending on destination, freight type, mode variation, etc.
If the shipper has some shipments destined for the West Coast, they’ll want a carrier who has regular routes in California. If they ship raw bulk materials long distances, then a carrier who offers rail intermodal transport is an excellent choice. It really depends on the need that must be met.
With such a variety of carriers, a shipper may or may not have a positive reputation. After all, the largest trucking company in the world has 23,000+ trucks but roughly 90% of all carriers have 20 trucks or less in their fleet. It’s almost impossible to have a clear idea of what many of these small shippers offer.
Monitoring Carrier Compliance
There are simply too may carrier options and so much variety in terms of service quality. Shippers are overwhelmed once it comes to monitoring their freight and enforce compliance among their carriers.
The FMCSA knew that it was difficult (if not impossible) to enforce quality and accountability across the entirety of one’s supply chain. In 2010, they established the CSA Scores. The CSA gives a national standard for carrier compliance and promotes a safer and more reliable supply chain.
The Seven Scores of the CSA are as follows:
- Unsafe Driving
- Crash Indicator
- Hours of Service (HOS) Compliance
- Vehicle Maintenance
- Controlled Substance/Alcohol
- Hazardous Materials Compliance
- Driver Fitness
Each score is based on a 0 to 100 point scale; the lower the score, better the performance. The FMCSA publishes carrier scores on a monthly basis.
By enforcing compliance in these seven areas, the FMCSA ensures that carriers are staying safe on the roads and that shippers can breathe easy knowing there is a standard of quality enforced across the industry
For more information about the CSA Scores read the CSA Fact Sheet.
The Key Benefits of Carrier Compliance
There are many benefits to carrier compliance for shippers, carriers, and consumers. Here are some of the benefits to enforcing carrier compliance.
Ensure a Quality Carrier/Shipper Partnership
Historically, relationships between carriers and shippers have been somewhat strained. Carriers often experience poor treatment and extremely long payment cycles from shippers, and shippers often experience poor freight handling and missed pick-ups from carriers. It’s a mess.
Carrier compliance mitigates any unwarranted distrust by keeping carriers accountable for operating by safety regulations. Additionally, it gives shippers insights on the reputation of the carrier. However; not every carrier works with every shipper. Remember this shippers – Comparing and analyzing carriers prior to signing a contract is incredibly important to the integrity of the business relationship.
Following a set of regulations that applies for all carriers and shippers makes the process of building partnerships easy for both parties. Information transparency through regulations guarantees that shippers and carriers can form a mutually beneficial partnership founded on trust and accountability.
Read our article on Becoming a Shipper of Choice to find out how to become a shipper that carriers want to work with.
Protect Company Assets
Manufacturers strive to put out the best product possible; product quality is essential for bringing in new customers and keeping existing customers For any asset-based companies, the safe transportation of their product is of paramount importance. If you work in soda bottling, you want to know that your soda will get from A to B without it being punctured or thrown around.
No company wants to work with a carrier who has a reputation for being reckless with the freight they are entrusted with. They want the carrier who will make sure their soda is safe from A to B to C and will report an everything in between.
But how can a shipper know they are partnering with a dependable carrier? Most carriers are pretty small and operate on a limited amount of data, meaning shippers often enter into contracts blind. In order to make informed decisions from an aggregate of data, a shipper needs to partner with a 3PL or a Freight Broker. Informed decisions are the best decisions and 3PLs help to keep shippers informed in their decisions.
Maintains Company Image
Most of the time, the only direct exposure a customer has with a shipper is the carrier who delivers the package. For the customer, the quality of a carrier’s service is a direct reflection on the quality of the shipper. The quality of service the customer receives depends primarily on the quality of the carrier.
If, as a consumer, you receive bad service, do you go directly to the shipper or the carrier to lodge a complaint? Probably not. In almost every case, you would go to the shipper. Complaints regarding something the shipper had no control over are frustrating to no end. Shippers need to hire carriers who will present their brand well and adhere to the scorecard developed by the shipper
CSA regulations ensure that the carrier will perform to the standards of the company and make a good impression on the customer. When this is the case the customer interactions with your chosen carrier leave the customer wanting to do business with your company again.
This is a big one. Most shippers aim to reduce costs for their company while maintaining quality service. Logistics is consistently one of the top expenditures for most companies and all shipping managers should look for ways to find the lowest-cost option while maintaining quality. This is a constant balancing act for most shippers as quality carriers typically charge a premium for their services.
The goal for shippers is to find a carrier who provides the best value for their services while delivering on transit time, communication, freight safety, and customer satisfaction.
Having safety regulations, such as the CSA, gives shippers confidence that their money isn’t going down drains like claims, insurance, damaged returns, damaged equipment, etc. Carriers with high CSA Scores are always a good option for shippers
Creates A Safe Shipping Environment
The CSA was established primarily to make the trucking industry a more dependable and safe enterprise. The ability to monitor and report on the performance of a carrier or individual driver plays a monumental role in keeping reputable drivers on the road and less-than-desirable drivers off of the road.
Driving a truck is a dangerous and often tedious job. Monitoring the driving habits of drivers is vital for the safety of everyone on the road. Large-scale semi-truck wrecks are a huge liability for carriers. Mitigating the number of incidents on the road saves lives and money.
Creates Enhanced Visibility
With all the data being reported on through the CSA and increased advancements in Transportation Management Software (TMS) shippers now have more information and data to work with than ever before. Carriers can now report on data down to the minute. This level of visibility is unprecedented and will shape the future of shipping.
Knowing the status of how carriers are performing on the road allows shippers to amend policies, alter routing guides, and negotiate rates depending on performance.
Carrier compliance is just one of many factors that helps carriers and shippers operate in harmony with each other. Manufacturers, suppliers, and consumers all benefit from carrier compliance.
Shippers, in order to stay in business, need their product shipped. Carriers, in order to stay in business, must provide excellent service and maintain a positive reputation that shippers will be drawn to. It is in the best interest of both entities to work within the standards of the other. In the carrier’s case, this involves the CSA regulations.
The safe and reliable transportation of your product is your top priority. Carrier compliance makes sure that your carriers have the same priority.