Non-Asset Providers: 3 Things You Should Know
By: Kelly St. Aubin, Vice President, Celtic Intermodal
In light of the recent derailments and severe weather disruptions, I wanted to illuminate some details on non-asset providers and what they add to the transportation industry. For shippers, utilizing a non-asset provider can lead to a number of benefits, especially when all of the moving parts in their supply chain aren’t going so smoothly. Below, I’ve laid out 3 important things to know about non-asset providers and how they may affect your transportation network.
1. What is a non-asset provider?
A non-asset provider, as the name implies, doesn’t own its own assets (trucks, trailers, etc.). However, there is a misconception that a non-asset provider doesn’t control the equipment within its network. This isn’t the case – once equipment enters the network, even if these assets are owned by another entity, the non-asset provider is able to direct and arrange them until they are released or terminated. For example, at Transplace’s partner Celtic Intermodal, we have approximately 5,000 assets in our network at any given time, and many of these have been in our network for months or even years.
2. What are some of the benefits of using a non-asset provider versus other providers?
One distinct advantage of a non-asset provider over an asset-based provider is enhanced diversity and flexibility. For example, at Celtic, we have contract rail agreements with all of the class-1 railroads, whereas other providers may only have contracts with one or two. And these multiple contracts allow for some serious supply chain flexibility to find the solution that best fits the customer’s needs. From a freight execution perspective, the niche of the non-asset provider is considering and executing “unconventional-type” moves, such as multi-stop moves and multiple ramp options.
When considering a myriad of factors such as regulations, driver shortages and capacity imbalances, it’s important to be cautious about choosing freight. Some providers may want to keep their drivers moving and turning over as much as they can, so they’re going to focus on dense shipping areas and ramp locations. However, a non-asset based provider will be generally more open to looking at locations that are farther away from ramps, lending added flexibility.
A non-asset provider may also be able to offer varied services when it comes to cross- border shipping. For example, at Celtic, we can offer “direct service” to multiple points in Mexico, or “partial service” through intermodal options to best accommodate customer needs. That way, we can be very flexible when it comes to cross-border freight and utilize multiple entry points such as El Paso or Laredo, versus providers with just one rail agreement.
3. What can shippers do to overcome an event such as a rail derailment?
In an event such as a derailment or severe weather, diversifying carriers is key – not only with truckloads, but also with rail. In the event of a derailment or other major problem, a non-asset provider will be able to “float” to other railroads so that all shipments aren’t at a complete halt. They can absorb loads and divert traffic from one railroad to another to give customers an alternate choice when disruptive events occur. For example, after the 2016 derailment in Amarillo, a customer diverted a load and provided Celtic the opportunity to move it on an alternate railroad. For shippers, it all comes down to diversification! It’s important to pick the location and mode of transport that makes the most sense – which saves time, resources and money for shippers in the long run.
What other benefits has your organization seen from diversifying your carrier base?