Whether your small business needs to ship parcels to customers or transport crates of goods to a warehouse, freight consolidation helps you save time and money by having your logistics provider combine partial loads for cheaper, more efficient shipping. With this method, shipments headed toward the same destination will arrive at waypoint and then go to where they're expected. Understanding the benefits of consolidated freight as well as the limitations involved can help you decide if this logistical strategy will well serve your small business and customers.
Freight consolidation refers to the process of combining multiple packages or partial loads together into one shipping container headed to a shared waypoint for final forwarding. This allows companies to use fewer loads and get shipments to their destinations more efficiently and cheaply.
Definition of Consolidated Freight
Freight consolidation streamlines the shipping process by having the carrier take multiple separate shipments and put them in one shipping container. These combined shipments can come from one or multiple suppliers and can travel by air, sea or ground together. In any case, they'll be heading in the same direction to a specific waypoint. It is there where the consolidated shipments get split up and forwarded to their final destinations, which could be customers' homes, retailers or warehouses.
This logistical method can help your small business solve the problem of having to choose between paying more to send a partial load of freight versus waiting longer to have a full shipping container ready to go. It also provides some flexibility since it works whether you have several individual parcels or several less-than-truckload shipments.
Benefits of Freight Consolidation
If you're looking for a way to boost the efficiency of your supply chain, choosing to consolidate freight can offer your small business these key advantages:
- Cheaper shipping costs: A common reason that your small businesses might consider consolidated freight is that your carrier would allow you to pay a lower bulk rate. You can avoid the high costs of transporting partial loads and having all that wasted cargo space that you could have otherwise used. Your customers can also benefit when you pass these savings down to them.
- More reliable shipments: As long as you choose a reliable provider and do some planning, the consolidation of cargo can help you get your products to the right destination with few interruptions. This will keep your customers happier when you can send their order on time. The key is to create a consistent schedule that meets your customers' demand and boosts efficiency in your supply chain.
- Less risk of cargo damage: When your shipments travel in fewer trucks, you benefit in terms of safety since you worry about fewer transfers where your shipments may get damaged or lost. Logistics providers that support consolidation usually have the experience to properly handle your cargo so that it gets to the destination in good shape.
- Less environmental impact: If you strive to minimize your business activities' impact on the environment, fewer separate loads traveling will mean less harmful emissions that hurt the air quality. Consolidation also means less fuel used.
Drawbacks of Freight Consolidation
While considering the advantages that the consolidation of cargo can provide, be aware of these potential drawbacks as well:
- Potential for inconvenience: The use of consolidated freight can mean that it takes somewhat longer for shipments to arrive since the consolidation and de-consolidation processes add extra work to the logistics process. If you don't account for this, you can experience problems with delays that frustrate customers or leave you without the stock you need on hand.
- Not suitable for all shipment types: Products that are fragile, perishable or hazardous aren't well suited for consolidated freight. Fragile and perishable shipments that can get broken or expire can cause you to lose money and can inconvenience the customers who are waiting for their products. Hazardous materials can lead to dangerous accidents when put with other cargo. Lastly, shipments that need to go through customs can cause frustrating delays if you consolidate them.
- Extra planning involved: Choosing to consolidate your freight requires work on your part to find an appropriate carrier that supports consolidation at an affordable price. You also have to do more work to ensure that shipments still arrive on time and come up with strategies to handle any delays that happen in the process.