Do you own your car, or do you lease your car?
Do you own your home, or do you rent it, or do you have a mortgage?
If you lease or rent or have a mortgage, then you share ownership of your assets with your lender.
So … Are you asset-based? Would your friendly bank agree?
If you are not asset-based right now, can you still be trustworthy?
Does the trucking company you use own their trucks and trailers, or do they lease them?
Does the trucking company you use own their terminals and yards, or do they rent or have a mortgage on them?
Like you, if they lease or rent or have a mortgage, then they share ownership of their assets with their lender.
So … Is your trucking company asset-based?
If your trucking company is not asset-based, should you still do business with them?
Why are these questions important, or even being asked.?
There is a school of thought held by some traditionalists in the shipping industry that maintains that using an “asset-based carrier” inherently provides more protection or stability than using a non-asset-based entity, be it a carrier or a freight broker.
The underlying theory is that:
A) If a carrier has assets, then those assets can be attached in the event of a large claim.
– But isn’t that what cargo insurance is for?
– And, do you really think that a well-run carrier’s accountants and lawyers would let them hold attachable assets in an operating company that was potentially subject to claims and suits?
B) If the carrier has assets, it is more financially stable and reliable.
– Do you consider yourself to be unstable or unreliable because you lease your car or you have a mortgage on your home?
So do assets really matter?
There are some very good carriers, large and small, that, from an accountant’s viewpoint, have very few assets. They are probably less than “asset-light”. And there are some patently lousy carriers that, again from an accountant’s viewpoint, have assets galore.
Maybe there are really good carriers who lease rather than purchase because they believe that there are other, more attractive, more cost-effective investment opportunities than a fleet of trailers or a maintenance garage. Or maybe they prefer to use owner-operators rather can company drivers. Or maybe their accountant and their lawyer told them to continuously move assets out of their operating company in order to protect them against claims and suits.
The point is, you usually just don’t know what assets a given carrier has, or how attachable those assets might be.
To further confuse matters, how a carrier gets your freight from origin to destination has very little to do with the size of their bank account, or the size of their fleet. They might carry your freight themselves, or they might interline it between carriers, or they might broker it to another carrier, or they might consolidate it with others’ freight and farm out the consolidated load, to a road or a rail carrier. You just don’t know. Very many times they also don’t know exactly how they are going to move your freight along its entire route until it is actually starting en route.
This is all very normal, common and reputable, but it means that your freight might never see any of your carrier’s own trucks, asset-based or not.
Which means that your carrier’s asset pool, large or small, might never ever come into active play for your freight.
Isn’t “Asset-Based” Actually a Proxy for What You Really Want: Solid Customer Protection?
If there is a claims problem
– do you want a piece of paper showing long list of assets that are quite possibly untouchable?
– or would you rather have a certificate of insurance that proves proper financial protection rooted in solid insurance coverage from a licensed and capable insurance supplier?
A long list of “assets” is of no use to you if they are not actually owned by the carrier itself, and are certainly of no use to you if the carrier’s liability is limited by law or by terms noted on the Bill of Lading to no more than the amount of the carrier’s cargo insurance.
The point is, in the event of a loss, it is the carrier’s insurance that you will be looking to for payment of your claim, not some accountant’s inventory list. Reliability and stability will be of little use by themselves if the carrier is not also properly insured for cargo loss.
So put your focus on the cargo insurance policy and the responsiveness of the cargo insurance company, and ignore the fancy asset inventory list, if it even exists.
And if you agree that what you really want is to have good insurance protection, then there is nothing very special about being “asset-based”?
In fact, from a protection-against-loss perspective, is there any real difference between a well-run carrier and a well-run freight broker?
To Summarize
There is a school of thought held by some traditionalists in the shipping industry that maintains that using an “asset-based carrier” inherently provides more protection than using a non-asset-based entity, be it a carrier or
a freight broker.
That is a myth.
And now you know why.
So What Is Important When Selecting a Provider?
Stable✓ Profitable✓ Experienced✓ Fully-Insured✓ Bonded✓ Reliable✓ Thorough✓ Trust-Worthy✓
Is it possible that these are the qualities that you really want your transportation supplier to possess and exhibit? Aren’t these features more important than where they have stashed their previous-years’ profits, or the value of the assets they have safely protected in a holding company? Maybe, just maybe, the quality of the service, the level of insurance, and the commitment of the staff is a better indicator of protection and performance, and a better set of selection criteria.
So maybe, even if you could measure their financial assets, it wouldn’t matter.
It is probably better to choose a transportation supplier who has the insurance coverage that can protect you when there are problems, and that can help you serve your customers better, rather than a transportation supplier chosen because it might have a gold star for net worth.
How does Copper Run Measure Up to These Qualities?
Stable: Brokering Freight continuously since January,1997.
Profitable: Operationally profitable in every quarter since January, 1997.
Experienced: Average Employee has 26 years in trucking, and counting.
Fully-Insured: Carries $500,000 in contingent cargo insurance, and is a registered certificate holder on carrier’s insurance.
Bonded: Holds a $75,000 Surety Bond issued by The Guarantee Company.
Reliable: Excellent history or service-driven customer loyalty.
Thorough: Unparalleled focus on attention to detail, on every shipment.
Trust-Worthy: Insured, Bonded, in business for the long term.
Copper Run Only Uses “Asset-Based” Carriers
And at Copper Run, we will only use “asset-based” carriers (including those who are not really very asset-based, but like to say they are anyway) for our customers’ shipments.
For us, an “Asset-Based” carrier is a defined as a carrier that has proven insurance in place that can be fully relied upon in the event of a claim.
When it comes to resolving a claim, a modern fleet of trucks all painted the same colour, and a paved yard with designated parking spots are all very interesting, but also all very inapplicable.
By The Way: What is Your Definition of an “Asset-Based” Carrier?
Almost every carrier has some assets, even they are not much more than the deposits made on their rolling stock. If ensuring that you are using an asset-based carrier, then the important question is, what is it that qualifies a carrier as being “asset-based”:
Is it a carrier that owns its own trucks and trailers?
– If a carrier leases its trucks and trailers, can it be called “asset-based”?
– If a carrier contracts with owner-operators who provide trucks, can it be called “asset-based”?
Is it a carrier that owns its own terminal and office buildings?
– If a carrier rents its buildings from a property developer, can it be called “asset-based”?
– If a carrier rents its buildings from a legally separate, but perhaps commonly owned, holding company, can it be called “asset-based”?
Is it a carrier that owns the land its buildings are on?
– If a carrier has mortgaged its land to a lender, can it be called “asset-based”?
– If a carrier leases its land from a legally separate entity, can it be called “asset-based”?
Is it a carrier that employs its own personnel?
– If a carrier uses independent owner-operators, can it be called “asset-based”.
– If a carrier uses staff employed by an employment agency, can it be called “asset-based”?
Is it a carrier that dispatches the trucks that carry its customers’ freight?
– If a carrier interlines much of it freight to a network of regional partners and local cartage companies, can it be called “asset-based”?
– If a carrier brokers many of its customer’s shipments to other carriers (now illegal for U.S> freight) can it be called “asset-based”?
– If a carrier subcontracts pick-up and delivery to independent cartage agents, can it be called “asset-based”?
Is it a carrier that has a certain fleet size, or serves a certain geographic area?
– If seems to be ‘big enough’, can it be called “asset-based’?
Is it a carrier that has an operating authority and current cargo insurance?
– If a carrier is properly licensed and insured, can it be called “asset-based”?
Is it a carrier you happen to know and are comfortable with?
– If a carrier is known to you, can it be called “asset-based”?
The answers to these questions are rarely obvious – without doing dozens of title searches, you really don’t know who owns what. And the answer is probably not even relevant. And recently we have seen a new term in the industry: “asset-light” carrier. If a carrier self-describes as being “asset-light” can it also be called “asset-based”?
Where does this debate end? How is it relevant? Why did it ever start?