Who Is Actually Hauling Your Freight? (Another Supply Chain Visibility Blind Spot)

I have long argued that companies need to expand their definition of supply chain visibility. It goes well beyond tracking shipments, orders, inventory, and assets in motion. End-to-end supply chain visibility also involves, for example:

Those are some of the biggest blind spots companies have today across their supply chains, exposing them to greater risks related to disruptions, brand reputation, liability, and regulatory compliance. 

There is another critical supply chain blind spot that many companies have: a lack of visibility to the carriers actually hauling their freight and their safety records.

Christopher Weaver from the Wall Street Journal put the spotlight on this problem last week in his front-page article, “Amazon Routinely Hired Dangerous Trucking Companies, With Deadly Consequences.” Here’s an excerpt:

The Journal’s analysis focused on 3,512 trucking companies that were inspected by authorities three or more times while hauling trailers for Amazon since February 2020…About 39% received an unsafe driving score that raised red flags, compared to 17% for all other similar companies. Among them, 388 had an unsafe driving score that ranked in the worst 5% of their peers. Amazon contractors with problematic scores were twice as likely as those with better scores to have a crash while working for the company.

I recommend that you read the article for more details, including examples of cases that led to fatal accidents and Amazon’s response to the Journal’s analysis.

The Subcontracting Problem: Who’s Actually Hauling Your Freight?

One of the deadly accidents highlighted in the article involved a trucking company that was a subcontractor to the carrier that accepted the load tender. “This [practice of subcontracting] is an industry-wide problem,” says Steve DasGupta, the safety director of Amazon’s freight unit, as quoted in the article. This is analogous to companies having good visibility to their Tier 1 suppliers, but very poor visibility to their lower-tier suppliers.

Here’s another excerpt from the article:

Amazon’s Mr. DasGupta said arrangements in which one trucking contractor subcontracts to another without authorization are prohibited in Amazon’s contracts. He said Amazon has been doing random audits of trucking contractors at its warehouses to ensure the right companies are picking up loads, and that the effort became more systematic late last year. Amazon said that so far this year it has warned or suspended about 1,200 companies [emphasis mine] in connection with violations of those rules.

How many of your loads are being transported by subcontracted carriers that are unknown to you? If Amazon is any indication, probably a lot more than you think.

Therefore, companies need to take action to address this blind spot in their supply chains or they risk landing on the front page of the Wall Street Journal too. 

While technology is never a silver-bullet solution, some transportation management system (TMS) vendors have carrier management solutions that can help. Way back in 2014, for example, in a post about its user conference, I highlighted how MercuryGate’s carrier management solution (named Carma at the time) “enables companies to manage the process of qualifying carriers and collecting and updating carrier information, such as safety, insurance, hazmat, financials, equipment, locations, and contact info. Whether you work with tens of carriers or more than 5,000 (as some of MercuryGate’s broker clients do), Carma is a more efficient and automated way of managing carriers than using spreadsheets, emails, and paper documents.”

Other examples include Transporeon’s Trust Center, where carrier profiles “can be created with all the necessary documents, licenses, approvals, and certificates needed to operate as a trusted and compliant partner on the network,” and new startup Carrier Assure that receives “all of the data directly from the FMCSA [Federal Motor Carrier Safety Administration] and our algorithms use data science to provide you with an easy to understand predictive score on how a full truckload carrier may perform for you.”

As I’ve written before, the root causes of poor supply chain visibility go beyond IT issues. People issues (e.g., poor training) and process issues (e.g., no metrics, operate in functional silos) are contributing factors too. That is certainly the case with this freight subcontracting blind spot.

Who is actually hauling your freight? Do they meet your safety requirements? If you don’t really know, it’s only a question of time before you find out the hard way.