Motor Carrier Risk Management: Are You Doing Due Diligence?

In the current economy of "Price Driven Logistics," some people may fail to realize the importance of ensuring the carrier that hauls a shipper's goods has a solid safety rating.

There are a few different companies that perform Motor Carrier Risk Management reporting functions such as DAT CarrierWatch.

When shippers go with "the cheapest solution" for their transportation needs, they may not even realize that they are jeopardizing their company if the carrier they are using has a less-than-adequate safety rating.

Contrary to popular belief, when an accident happens with a tractor-trailer, all parties can be held liable in the event of legal action. This includes the driver, the company he works for, maybe the mechanic who worked on the truck if a mechanical issue is to blame, the 3PL or Broker that may be involved, and lastly the shipper or manufacturer of the goods loaded onto the truck.

If the goods were not properly secured in the truck the shipper can be at fault. If the shipper used a carrier with a poor safety rating, the shipper or manufacturer may be deemed negligent by NOT performing proper due diligence and therefore be fined or face other legal action. Some shippers believe that once they load their goods onto a truck, the shipper or manufacturer has no liability. That thought process could not be further from the truth.

Every shipper should ask the carrier, 3PL, or Broker that they work with, what policies the organization has in place to help ensure the carriers are properly vetted. If the answer is, that they use the cheapest carrier and or they don't do any safety checks, then you may want to think about your own company's processes in selecting business partners regarding logistical needs.

Just as a bank would not give an individual who claimed bankruptcy last year a large loan, a shipper or manufacturer should not knowingly put freight on a truck with a less-than-adequate safety rating, without at least investigating the reasons for the rating and what is being done to correct the problem.

Risk vs. Reward

Risk - It is not prudent to save $100 - $300 using carrier "A" or 3PL "A" that fails to perform proper safety checks on their carriers.

Reward - It is prudent to use a carrier or 3PL that may charge a little more, but gives you peace of mind that they have a policy and procedures in place adhering to using safer carriers.

Lastly, while no service can ever eliminate the hazards that are on the road, ice, snow, wind, flood, other drivers, tire blowouts, etc, having a process in place and using a carrier and or 3PL that has a process for properly vetting drivers and carriers is in the best interest of shippers. No amount of money is worth the cost when it comes to legal ramifications, should a shipper be named party to a legal lawsuit.