Terms & Glossaries of Shipping and Trading
Consolidation is the process where a carrier or a shipping company combines several smaller shipments into one full container. Several small shipments that are all being sent to the same location will be bundled, or consolidated on a single truck, and then shipped together to their destination. The process is not only beneficial to the shipper, but also the customer or retailer to whom the products are being sent.
Consolidation is a practice where shippers combine multiple LTL shipments heading to the same geographical area into truckload shipments.
As shipping volume increases, per unit shipping costs decrease, so it’s advantageous to combine shipments to boost total volume and lower overall transit costs.
The complete process as carpooling – with direct added benefits for all businesses.
Advantages of Consolidation:
1. Minimize Shipping Costs
A higher volume of freight has lower shipping costs. Thus, with freight consolidation and deconsolidation, several companies (with LCL or LTL) can merge their shipments together. Therefore, they avoid the costs for renting a complete container or truck, in turn, save container tariff, and other freight charges.
2. Improved Relationship Between Shippers and Carriers
Consolidating for freight forwarding also boosts professional relationships between associated companies by establishing long-term shipping partnerships with them. The carrier-shipper relationship is also enhanced — with reduced overhead operational costs and increased profits for all the parties.
3. Saves Time & Increases Efficiency
Considering the total time taken by each container separately, one consolidated container has lesser shipping time. (Because, instead of doing 5 rounds for each shipment, all the goods reach in 1 round in lesser time!) Faster transit time, reduced costs, and decreased wait time — all add up for increased efficiency. Jackpot!
4. Better Shipment Scheduling
Because there are multiple companies involved, the carrier is responsible for the consolidated shipment. So, the loading process is faster. Consolidation decreases the docking and wait time. This keeps the shipment schedule on track.
5. Safety Advantages
Things happen in shipping, it’s just a reality of doing business in which you ship products, but using freight consolidation can actually greatly reduce the risk involved. When you have systems in place and use an experienced shipper to handle your freight, your products will be in safer hands. And not only that — it will be in those hands less often, as there are fewer transfers involved in the shipment, meaning it won’t be handled as much as it would in other shipping methods.
Consolidating shipments is an incredibly useful tool for shippers and carriers alike. Likewise, it’s never been more necessary than it is now. As the economy grows and technology continues to improve, the reasons to implement a shipment consolidation strategy will only increase.
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