What is Cargo Consolidation?
Cargo consolidation involves combining multiple shipments into a single load. Shipping several smaller shipments in a single container allows you to take advantage of bulk rates and ship different types of goods together on the same truck. Cargo consolidation can offer several benefits, including reduced shipping costs and improved efficiency.
When shipping costs are lower, businesses can pass on the savings to their customers, making their products more competitive. In addition, consolidating shipments can reduce the number of trucks on the road and improve traffic flow. As a result, cargo consolidation is a win-win for businesses and consumers.
There are two types of shipments:
- Less-than-Container Load (LCL) – Also called Less-than-Truckload (LTL), LTL shipments are smaller than shipments that need a full container or truck. The shipment’s volume determines the LTL price. LTL shipments are more expensive than freight consolidated into an entire truck.
- Full-Container-Load (FCL) – FCL shipments are larger than LCL shipments and can fill an entire container or truck. The container’s size determines the FCL price. As a result of being consolidated into a single truck, FCL shipments are less expensive than LCL shipments.
Shippers can use various methods to consolidate their shipments. Here are the most common options.
The most common form of consolidated shipping is ground shipping. It involves using a truck to transport goods from one location to another. Typically, ground shipping is the cheapest option, but it takes longer.
Air shipping may be the best option for businesses that need their shipments delivered quickly. Air consolidation involves using an airplane to transport goods. It’s the fastest shipping method but also the most expensive.
Sea shipping is another option for businesses that need to consolidate their shipments. It involves using a ship to transport goods from one location to another. Sea shipping can be slower than air shipping but more advantageous for international shipping because it is typically less expensive.
There are several advantages of cargo consolidation, including:
Significant Cost Advantages
One of the most significant advantages of cargo consolidation is that it can save businesses necessary money on shipping costs. Companies can take advantage of volume discounts and other cost-saving opportunities when consolidating their shipments.
Maintaining a consistent supply chain lowers the chances of delayed transit times, missing products, or an incorrect shipment. It not only helps streamline your shipping process but also increases customer satisfaction.
More Satisfied Customers
Because you have faster transit times, you can deliver your products quickly and efficiently, and your customers will be more satisfied. It can lead to increased sales and repeat business.
Maximize Supply Chain Performance
The number of stages and unpredictable variables at each stage of a delivery’s journey raises the risk of delays. Consolidation eliminates this by combining many FTL moves, which relieves you from the responsibility of monitoring several LTL changes.
In addition, sellers have more control over production schedules and deadlines since they handle the whole distribution process themselves or via an outsourced fulfillment provider.
More Sustainable Supply Chain
Cargo consolidation helps reduce the number of trucks on the road. It’s good for the environment and can help companies improve their environmental plans. Consolidating shipments also saves money on fuel and transport costs.
Improved Relationship Between Shippers and Carriers
Consolidating for freight forwarding can help build strong relationships with associated companies. It happens by establishing long-term shipping partnerships with them. Moreover, the carrier-shipper relationship improves due to lower overhead operating costs and increased profits.
Improved Flexibility and Time Management
Storing your products in a consolidation facility gives you more control over your inventory. It’s because you can ship your products in the required quantities. Additionally, if a customer needs a product quickly, you can use expedited shipping methods to get it to them faster.
In relation to that, utilizing online checklists can help you keep track of your inventory levels and shipments more efficiently, allowing you to better control your stock and respond to customer needs.
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Although cargo consolidation is a great way to save money and improve efficiency, there are some challenges that businesses may face. These challenges include:
Not all carriers want to transport consolidated freight. However, if you can find a carrier willing to haul your shipment, be sure you understand the process and get a reasonable charge. Third-party logistics companies (3PLs) can help with this.
More Time Planning
While it might save you time during transport, consolidated shipments do require additional advanced planning and organization. Be sure to consider costs, size, timing, etc., so that your deliveries are safe and on schedule.
Often, shippers lack the necessary resources for freight consolidation, so they will have to outsource the process. It can end up taking unnecessary transit time and costing more money.
Increased Risk or Damage
There are times cargo must be loaded and unloaded multiple times, going through several touchpoints before it reaches its final destination. As a result, product damage is more likely to occur.
Since freight consolidation involves multiple shipments from different companies, there can be a lot of coordination required. It includes figuring out schedules, comparing rates, and more.
Another challenge for businesses is finding a place to store their products until they are ready to be shipped. It can be an issue if you do not have enough space or cannot find a storage facility that meets your needs.
FAQs about Cargo Consolidation
A great example of cargo consolidation is a toy, pet, or fabric store taking their packages to a consolidation warehouse for repacking into one bigger shipment before being delivered to their destination. The individual shipments are broken apart at the destination and delivered to each intended recipient.
A cargo consolidator is a company that specializes in putting together multiple smaller shipments into one larger shipment. To do this, the company can gather shipments from several companies and consolidate them at their warehouse before shipping them out.
The freight forwarder’s destination agent takes over when the LCL container arrives at the destination port. Deconsolidation warehouses will collect the container and transport it to the destination warehouse. All container cargo will be taken out and turned into individual LCL shipments.
3PLs are third-party logistics companies that provide services to help businesses with their supply chain. It can include things like transportation, warehousing, and more. 4PLs are fourth-party logistics companies that act as an extension of a business. They provide comprehensive supply chain solutions and often work with multiple 3PLs to get the job done.