Choosing a third party. (third-party logistics services)

When a shipper considers third-party logistics services for freight management, the introduction often comes to the chief financial officer or comptroller.

The logistics provider first does a preliminary audit of the company's previous freight bills is done. If the logistics firm can find ways to cut the shipper's freight bills and turn a profit for itself, the parties negotiate a contract for a full study.

The study includes a comprehensive analysis with a post-audit of freight bills paid by the shipper over 30 to 60 days. The audits are compiled into reports and checked for failure by carriers to comply with rates and service requirements. The logistics provider also looks for inefficiencies within the shipper's organization. The logistics provider may check for non-compliance among as many as 40 different fields of a freight bill.

The preliminary study may also concern potential freight service improvements, such as reducing the number of carriers and improving product packaging.

If the shipper is …