Excerpt from: China Supply Chain and Logistics Strategy
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| April 02, 2007 | | Best in Class Practices: Say No to Overloading | When evaluating, selecting, and managing third party logistics providers to handle domestic transportation in China, Best in Class companies carry out a detailed analysis of the cost structures of their prospective 3PLs. Such an analysis will uncover whether your 3PL is following legal and ethical business practices. In particular, many 3PLs in China subcontract the transportation to smaller local trucking firms. These firms then subcontract further, resulting in a subcontracting trail spanning several layers.
By probing into who actually handles your freight and how it is handled usually uncovers serious ethical and legal problems. One problem which significantly affects the service levels of transporting in China is directly related to the overloading of trucks. Overloaded trucks are illegal and present unnecessary risk to your cargo. Many of the small mom & pop truck drivers operate without insurance. In order to make a profit to survive these operators also do not pay for truck maintenance fees, they utilize one driver for the entire haul, and avoid paying endowment insurance and welfare. The drivers and their trucks are operating illegally and will flee the scene upon a facing a traffic accident, leaving your cargo at site.
Reasons for Overloading
- Low transportation prices
- Fierce competition
- Road maintenance fees
- Excessive number of toll gates (some of which are illegal)
China 3PL Selection and Management Best Practices
- Conduct a cost structure analysis of your potential 3PLs
- Use your own trucks, or..
- Forbid transferring and subcontracting or..
- Limit the subcontracting to a maximum of 2 levels and implement standard SOPs to monitor performance, including audits.
- Say no to over-loading
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