Jun 05 2018
How to ensure business processes reliability with carriers
In the transport and logistics business, success entirely depends on achieving targeted KPIs and fulfilling customer requirements. If an externalfleet vehicle is necessary, the issue of choosing reliable carriers – who will deliver cargo safely and on time – always arises. The “black list” of ways carriers can go wrong seems neverending: loading cancellation, theft, damage to goods, and unethical behavior, to name a few. The only question that matters, however, is how to avoid cheaters and thereby guarantee high quality transport services to customers.
We talked with experts from international transport and logistics provider AsstrA-Associated Traffic AG about the carrier selection process.
How does AsstrA select potential partners?
Vladimir Efremov,Deputy COO for Supplier Relationship Management at АsstrA Management:
There are two ways we acquire new suppliers. Firstly, when the carrier proposes cooperation by either filling out the appropriate form on our website, contacting one of our offices, or meeting us at trade fairs such as TransRussia or BreakBulk Europe. Secondly, when developing new business or where we lack a fleet vehicle on a particular route or to a new destination, our sales department or operational units may reach out to suppliers identified as fulfilling certain requirements.
What are the minimum requirements for suppliers at the first stage?
Vladimir Efremov:
Every transport and logistics company offering products and services of adequate quality at reasonable prices can potentially become an AsstrA supplier. We select the best offers in terms of price and quality. Adequate fleet vehicles and service quality levels are the basic requirements. Then we check compliance and verify data. Afterwards the potential carrier becomes an actual AsstrA supplier.
Michał Młynarski, Acting Head of the Supplier Relationship Management Division:
In practice, everything depends on the requirements of a given customer and the specific type of transport involved. First of all, we should determine if we can work with a forwarding company or if we should provide our own vehicles. We also have to remember about the fleet vehicle’s age and condition, whether the carrier has the necessary permits, and so on. Our basic requirements include compliance with environmental standards Euro-5 and Euro-6 and valid carrier's liability insurance coverage. Initially focusing on these two requirements gives us a significant number of potential carriers.
What verifications does the carrier undergo during the initial review stage?
Michał Młynarski:
The carrier verification process begins in our Supplier Relationship Management (SRM) Division. AsstrA specialists check the carrier's registration documents, licenses, and liability insurance. At this stage, the actual ability of the carrier to provide the transport is checked. We verify whether there are additional insurance options for transporting specific groups of goods on particular routes. Then we do a background check on the carrier: we verify contact details, compare phone numbers and e-mail addresses against information on transport exchanges and in databases, documentation, as well as in other public sources. We also ask for references and verify their validity.
These comprehensive procedures help us make sure that we are doing business with a legitimate carriers, not fraudsters.
Are there restrictions for new carriers regarding the number of orders or routes?
Vladimir Efremov:
We do not engage new transport and logistics providers when serving our key clients or transporting highly liquid or expensive goods. We commission new providers for simple, straightforward transport orders. At the beginning of partnerships, we must ensure the quality and reliability of suppliers before beginning cooperation in earnest. There are some restrictions aimed at sustaining the company's security. We strive to ensure that no more than 30% of our clients or 15% of the traffic on a trade lane depends on any one supplier.
How is safety guaranteed for customer from a legal point of view?
Vladimir Efremov:
The carrier's liability for adverse events such as loading cancellation, damage to the vehicle, etc. is determined in the agreements with the carrier and, in general, AsstrA’s guidelines for working with suppliers. After a shipment, we carry out a mandatory quality control check and evaluate the possibilities of further cooperation with the supplier taking into account the percentage of transport delays.
How does a supplier establish full credibility?
Michał Młynarski:
We have introduced a rating system. Evaluation of a carrier is based on a several parameters including the number of orders, turnover generated during cooperation, fleet size, percentage of inconsistencies (delays), etc. The higher the rating, the more reliable the supplier is for us.
Does the AsstrA Group have a black list of carriers?
Michał Młynarski:
Yes, we have our black list of carriers. Companies are typically put on it for two reasons: not meeting its direct obligations under the contract (e.g. regarding delays, loading cancellation, a lack of information about the vehicle) or turning out to be a criminal. Sometimes we detect discrepancies (e.g. false insurance or fake car registrations) while doing background checks. We also receive information about unreliable carriers directly from customers and from professional associations to which we belong.
We regularly send information about the scams we detect to transport exchanges and associations. In the event an actual transport company’s documents have been used fraudulently, we contact the real carrier and warn him.
Can you give any general advice for choosing a transport company?
Michał Młynarski:
Always do due diligence on your suppliers, particularly regarding their presence on transport exchanges and in registration databases. Contact details should not vary depending on the source. You should check licenses and documents in registers and the availability the car identification numbers registered for insurance. It is very important to verify when the company was founded and whether its owner has changed. Fraudsters often buy existing transport and logistics companies for criminal purposes. References from trusted partners or professional carrier associations are also important.
In general, believe facts and documents, not words!
E-mail: asstraitalia@asstraitalia.com