Cancel OK

Avoid Taking Chances

Checking out new carriers before they load up
Avoid Taking Chances

So instead of relying on the government’s often inconsistent information, many transportation firms established their own due diligence programs.  Although they have to use CSA, shippers and brokers point out that FMCSA data is insufficient to thoroughly vet a potential carrier.

Risk, Efficiency And Profitability
In the absence of a central authority, due diligence in hiring carriers is like a jigsaw puzzle. So says Kenny Lund, vice president of support operations at Allen Lund Company, Inc., headquartered in Los Angeles, CA with more than two dozen branch offices throughout the country. “You gather a lot of pieces from all over, and then take a look at that carrier. Everybody wants hard and fast rules about how to qualify a carrier, but it’s much more of an art than a science.”  Lund finds the whole process rather ambiguous, stating, “it is much more difficult to do well than people realize.”

A holistic approach is needed for risk management and due diligence, says Toronto lawyer Marvin Huberman. Companies must identify all the steps and procedures to take in minimizing risk, while maximizing efficiency and profitability. This may require the advice of outsiders like board members, consultants, and other experts, he adds. “Companies cannot afford not to do it. It’s not even a question of should we do it, or how do we do it best. In my view, it’s imperative. There is no choice,” he declares.

While a produce load may be valued in the thousands, a wrongful death or injury lawsuit could cost millions. It is therefore well worth the investment of time and capital to create a solid due diligence program. Following are some of the basics. 

Due Diligence
First Steps
Prior to evaluating new carriers, experienced brokers suggest selecting a person or team to be responsible for keeping track of carriers and providing the necessary training, or outsourcing these duties to a company with the required expertise.

For example, Allen Lund Company has nine people in its Carrier Resources department dedicated to finding information, keeping track of insurance certificates, and identifying potential problems.

“You need people who are experts, and our people are trained so they can look at a setup and identify all the red flags somebody else would miss,” Lund says. “Once you have two, three, four, five red flags, you eliminate them. It’s usually not just one thing that eliminates a truck, it’s a combination.”

Twitter