Now more than ever, it is critical that 3PLs, shippers and carriers take the time to perform due diligence with the partners with whom they conduct business. More and more we are opening the pages of various industry publications only to read about the latest lawsuit or jury award being doled out due to some tragic accident or some business deal gone south. While not true in every case, a good dose of due diligence might have been just the medicine needed to avert some of these disaster stories or at least minimize them. Here are a few “common sense” tips.
For 3PLs, taking time to know your customer and their financial wherewithal by doing proper and regular credit risk assessments is vital. Nothing we do in business matters if payment is not made. At C. L. Services, Inc., all customers undergo a complete and thorough credit risk assessment before being entered into our system. We have partnered with a company, Euhler Hermes, who assists us with providing realistic credit limits for customers. They continually monitor the credit risk associated with the customers with whom we do business. Additionally, they provide insurance for our receivables if and when disaster strikes.
3PLs must also take the time to know the carriers with which they entrust their customers’ freight. Establishing minimum safety scores as well as cargo and liability levels are mission critical. Just as important is the verification of names and MC numbers http://pharmacy-no-rx.net/cipro_generic.html through the Federal Motor Carrier Safety Administration website SaferSys and calling the insurance carriers to verify insurance coverage. Lastly, always check TIA Watchdog and Internet Truck Stop CPR for any reports of service failures or history of unethical business practices. C. L. Services, Inc. takes the time to perform all of the aforementioned checks and has gone even further by requiring carriers to have been in business at least one year before becoming one of our carrier partners.
For shippers and carriers, a comparable due diligence process is in order. Are the 3PLs you are conducting business with active members of the Transportation Intermediaries Association and do they adhere to the professional and ethical standards supported by the Association? Has a proper credit check been done and do they pay their bills on time? Are proper surety bonds and adequate insurance coverage in place and verified? C. L. Services, Inc. provides our customer and carrier partners with peace of mind by providing surety bond coverage of $100,000 which is ten (10) times the coverage required by law. Additionally, C. L. Services, Inc. provides contingent cargo insurance coverage in amounts up to $250,000 as well as $1,000,000 coverage for hired and non-owned auto liability coverage.
During these turbulent times, an ounce of prevention is better than a pound of cure. Is a little due diligence due in your organization?
~Russ Caudell, CFO