The shipping industry accounts for approximately 90% of world trade. It includes several key players that work together to move goods from one place to another. Two of the most fundamental roles are shippers and carriers. But when it comes to shipper vs carrier, many businesses get confused understanding the difference. This can lead to problems when negotiating contracts, assigning liability, and managing logistics. Supply chain disruptions, delays, and extra costs can occur without clearly delineating shipper versus carrier duties.
Let’s understand what shippers and carriers are and the differences. We’ll also look at common pain points that arise when shipper and carrier roles blur, and how ShiTop as the third-party logistic (3PL) provider can help optimize the shipper-carrier relationship.
What is a Carrier?
A carrier is a company that transports goods from one location to another. There are several types of carriers:
- Motor carriers transport freight over land by truck. They are responsible for picking up shipments from shippers and delivering them to their final destinations. Motor carriers handle LTL (less than truckload) and FTL (full truckload) shipments.
- Rail carriers move freight using the railroad system. They offer intermodal services by coordinating with motor carriers for first and final-mile delivery.
- Air carriers transport goods domestically or internationally by air. They provide faster transit times for time-sensitive shipments.
- Ocean carriers move freight across oceans using maritime vessels. They handle international shipments in containers from exporters to importers.
The main responsibilities of a carrier include:
- Providing transportation services under a contract of carriage.
- Ensuring cargo security and preventing damages or losses.
- Maintaining insurance coverage.
- Tracking shipments and providing status updates.
- Issuing bills of lading and other transport documents.
- Adhering to regulations regarding safety, security, licensing etc.
- Optimizing logistics networks and routes.
- Investing in transportation assets and infrastructure.
Read Also: Common Mistakes to Avoid Carrier Cost
What is a Shipper?
A shipper is the party that arranges for the transportation of goods from one location to another. The key responsibilities of a shipper include:
- Preparing and packing goods properly for shipment. This includes proper packaging, labeling, and meeting any special requirements for hazardous materials.
- Booking transportation with a carrier. The shipper selects the mode of transport (truck, rail, air, ocean) and makes arrangements with a carrier to haul the freight.
- Providing documentation and information to the carrier. The shipper supplies a bill of lading, commercial invoice, packing lists, and other paperwork required for the shipment.
- Paying for the transportation charges. The freight costs are typically paid by the shipper unless other arrangements are made.
- Filing claims for any loss/damage. If goods are lost or damaged in transit, the shipper is responsible for notifying the carrier and filing a claim.
- Managing the overall shipment process. The shipper oversees the end-to-end process, from packing to final delivery. They coordinate pickup, track the shipment, and manage any issues.
The shipper is the party that initiates and oversees the movement of goods through the supply chain. They contract with carriers to transport the freight from origin to destination. Shippers are experts in logistics and transportation and are responsible for the safe and efficient shipment of products.
The Differences Between Shippers and Carriers
1. Bill of Lading
The bill of lading is one of the key differences between a shipper and a carrier. The bill of lading is a legal document that provides details about a shipment, such as the type and quantity of goods being transported, the parties involved, and terms and conditions.
With a bill of lading:
- The carrier issues the bill of lading once the shipment is in its possession. As the party providing the transportation service, the carrier generates this document.
- The shipper is named as the consignor on the bill of lading. The consignor is the party who initiates the shipment, so this refers to the shipper who arranged for the goods to be transported.
2. Liability
Carriers have extensive liability for cargo under their care and control. They are legally responsible for any loss, damage, or delay to the freight while in transit. This includes liability for theft, fire, accidents, and other hazards.
The carrier’s liability begins when they take possession of the cargo and sign the bill of lading. It continues throughout the journey until the shipment is delivered safely to the consignee. At that point, the carrier’s liability ends.
Carriers may limit their liability in their contract of carriage. But they cannot disclaim liability entirely. Most carriers have liability coverage that compensates shippers for loss or damage, up to a certain maximum amount per pound.
Shippers have minimal liability. They are only responsible for properly preparing, packaging, and labeling the shipment. Once it’s turned over to the carrier, the shipper has fulfilled their duties. Any issues during transit are the carrier’s responsibility.
The shipper must accurately describe the cargo, its weight, dimensions, and any special handling needs. However, they are not liable if the carrier mishandles or damages the shipment after acceptance.
3. Ownership
The carrier does not take ownership of the goods during transportation. The shipper retains ownership of the cargo until it is delivered to the consignee.
When the carrier takes possession of the goods for transport, this does not constitute a transfer of ownership. The carrier is simply fulfilling its contractual obligation to safely convey the cargo to its destination on behalf of the shipper.
Ownership of the shipment remains with the shipper or consignor until the intended receiver or consignee takes delivery and possession. This is an important distinction between shippers and carriers regarding legal responsibility and liability.
The shipper ultimately holds ownership and bears the risk of loss for the cargo. If goods are damaged or lost in transit, the shipper suffers the financial loss, not the carrier. The carrier may be contractually or legally liable for reimbursement, but they do not take on actual ownership at any point.
Retaining ownership allows the shipper to redirect or recall goods up until the point of delivery if needed. The carrier cannot sell, keep, or dispose of the goods since they are not the legal owner, only the temporary custodian during transport.
Consignor vs Consignee
The consignor is the shipper or seller who initiates the shipment. They are the original owners of the goods being shipped. The consignor prepares the bill of lading and contracts with the carrier.
The consignee is the receiver or buyer who accepts delivery of the shipment. They become the new owner of the goods upon delivery.
The key differences:
- The consignor (shipper) is the original owner of the goods and delivers them to the carrier for transport.
- The consignee (receiver) becomes the new owner of the goods when accepting delivery from the carrier.
- The consignor selects the carrier and pays the freight charges.
- The consignee has no part in selecting the carrier but may be responsible for other charges like demurrage or storage fees.
- The consignor is named on the bill of lading as the party shipping the goods.
- The consignee is named on the bill of lading as the party receiving the goods.
Common Carriers in the US
The US transportation industry relies heavily on common carriers to move freight across the country and beyond. Here are some of the most common types of carriers operating in the US:
1. Trucks
Trucking is by far the most prevalent freight transportation method in the US, moving around 70% of all domestic freight tonnage. There are over 500,000 trucking companies in the US, from small family-owned businesses to massive fleets owned by logistics giants like JB Hunt and Schneider. Trucks transport goods of all types and sizes over both short and long distances.
2. Trains
Though rail transport moves a smaller percentage of US freight compared to trucks, it remains a vital carrier option for heavy, bulk items and intermodal shipments. Major rail networks like BNSF, CSX and Norfolk Southern link major cities and ports across the US. An advantage of rail is the ability to transport enormous volumes of cargo efficiently.
3. Planes
Air cargo represents less than 1% of US freight tonnage but is critical for time-sensitive shipments. FedEx, UPS and DHL are major air freight carriers. Air transport excels at moving high-value, lightweight goods rapidly across long distances. Perishable goods also frequently move by air to avoid spoilage.
4. Ships
Marine shipping moves around 20% of US foreign trade tonnage. Massive ocean carriers transport containerized cargo between US ports and overseas markets. Top marine shipping lines include Maersk, MSC, and COSCO. Foreign trade relies heavily on affordable ocean carrier services. Ships also move domestic cargo along coasts and inland waterways.
Read Also: What is DDP Shipping?
How to Choose the Perfect Carrier with 3PL?
Using a third-party logistics (3PL) provider for carrier selection and management offers shippers several key benefits:
1. Flexibility
With a managed transportation service from a 3PL, shippers can access a wider network of vetted carriers. This makes it easy to switch carriers as needed based on capacity, rates, performance, and other factors. The 3PL handles the carrier relationship, freeing up the shipper’s time and resources.
2. Cost Savings
3PLs have the leverage to negotiate favorable shipping rates based on their aggregate volumes across customers. Working with a 3PL often results in lower rates compared to what a shipper could secure on their own.
3. Risk Mitigation
Relying on a single carrier or a limited number of carriers is risky. If there are service failures, capacity shortages, or other issues, it can severely disrupt the supply chain. Using a 3PL with a large carrier network provides redundancy and reduces this risk.
4. Focus on Core Business
Managing transportation and logistics is complex and time-consuming. By outsourcing to a 3PL, shippers can stay focused on their core business and expertise. The 3PL becomes an extension of its logistics team.
5. Reporting & Analytics
3PLs provide data-driven insights using transportation management system (TMS) technology. This enables better planning, execution, and optimization of the supply chain. Shippers gain visibility and business intelligence.
Read in Detail: How to Choose the Best Shipping Carrier for the Order Fulfillment Process?
How ShipTop Can Help You?
ShipTop is a leading 3PL fulfillment center based in Canada that provides comprehensive logistics services for shippers. With advanced technology and experienced logistics experts, ShipTop offers the following services and solutions:
1. Carrier Management
- Access to an approved network of vetted carriers across North America
- Carrier selection optimization to get the best rates
- Centralized freight audit and payment
2. Order Fulfillment
- Pick and pack services with 99% accuracy
- Flexible solutions for B2B and B2C orders
- Integration with sales channels and marketplaces
3. Warehouse Management
- Scalable storage and inventory management
- Real-time inventory visibility and reporting
- Value-added services like kitting and product customization
4. Transportation Management
- Route optimization and load consolidation
- Shipment tracking and proactive alerts
5. Supply Chain Visibility
- Real-time dashboards for inventory, orders, shipments
- Data analytics for identifying bottlenecks
- Automated KPI reporting and scorecards
With ShipTop’s optimized solutions, shippers can focus on sales and marketing while leaving logistics operations to the experts. Contact ShipTop today to see how we can maximize your supply chain efficiency.
