Freight consolidation offers a range of benefits that are crucial for your business. We’re talking about fast and efficient service delivery – and more! Just scroll down to find out everything you need to know about freight consolidation.
The demand for containerized shipping in the international market increases when trade and commerce increases. Which means that shipping charges and freight costs might burn a hole in your pocket due to factors such as unavailability of containers, traffic, longer wait time and non-strategic shipping.
Small and medium enterprises (a.k.a SMEs) are mainly affected by these increases because of their low volume of the shipment. The shipment can be divided into two categories:
- Less than Container LoadWhat is less than container load? Less than container load (less than container load, LCL) is a shipping term that refers to the delivery of cargo in smaller quantities than a full container load. A f... More (LCLWhat is less than container load? Less than container load (less than container load, LCL) is a shipping term that refers to the delivery of cargo in smaller quantities than a full container load. A f... More) – This is when your cargo does not fill up the entire container which allows it to be combined with other cargo.
- Less than Truck Load (LTL) – This is a shipping service mainly for smaller quantities of freight
This means that the company doesn’t have that many orders to utilize a container fully, thus driving up the operational costs.
So, what’s the solution to this? Freight consolidation and deconsolidation. Let’s dive into that a little more:
Freight Consolidation and Deconsolidation explained
In simple terms, freight consolidation is combining several small shipments into one large shipment. This means that various companies can collaborate and use one container or truck for their cargo depending on their requirements. When the consolidated cargo has reached its destination(s), it is deconsolidated — i.e. separated into respective packages and delivered accordingly.
A single company can also employ consolidation and deconsolidation if their cargo is going to several different destinations on a single route.
You can think of the complete process as carpooling – with direct added benefits for all businesses. Let’s go through 5 benefits of freight consolidation and deconsolidation a bit more:
5 benefits of freight consolidation and deconsolidation
1. Minimize shipping costs
A higher volume of freight has lower shipping costs. Thus, with freight consolidation and deconsolidation, your company (with LCLWhat is less than container load? Less than container load (less than container load, LCL) is a shipping term that refers to the delivery of cargo in smaller quantities than a full container load. A f... More or LTL) can merge their shipments together. Therefore, avoiding 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 boosts your 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 one round in less 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. Happier consumers
With freight consolidation and deconsolidation, the whole shipping process becomes faster and more efficient. Thus, deliverables would reach your consumers faster. The better services will attract them to your business.
Risks of Freight Consolidation
A consolidation and deconsolidation strategy comes with its share of risks. Some of them include:
| Limited resources | Shippers don’t always have resources for freight consolidation on hand, which means they need to outsource. This can take up unnecessary time. |
| Increased risk or damage | Several touchpoints mean several stops – this means your cargo must be loaded and unloaded multiple times, which increases risk of loss or cargo damage. |
| Communication barriers | Think broken telephone – the more shippers involved, the harder it becomes to communicate clearly and effectively. |
| Delayed service and delivery | A delay in consolidation or deconsolidation can hit the brakes on the entire shipment, meaning late service and delayed delivery. |
It’s not all gray skies though ‒ The benefits of freight consolidation and deconsolidation outweigh the number of risks. If shippers opt for a reputed freight forwarder or shipping carrier, these risks can be minimized, or even prevented altogether.
With proper planning, recorded transportation details, companies with a good track record, trusted sources, freight forwarders liability insurance, and now, with the help of smart containers and big data, the shipment can be tracked efficiently, ensuring safety and secure delivery.
Are you thinking of expanding your network, but don’t know where to start? Here’s how Container xChange helps you:
Grow your network with Container xChange
Consolidation and deconsolidation of freight are the perfect solutions for businesses with smaller shipment volume. It’s proven to be cost-saving, efficient, productive, and offers quicker delivery. Or even for cargo with different destinations on a single route.
Here at Container xChange, we simplify the process of freight consolidation by connecting you with a trustworthy partner. You’ve got the option to view a company’s public profiles, take a look at the ratings and performance review before you do the business talks. Connect with who would like to do business with and experience an easier and efficient partnership. Gain access to a range of benefits such as 100% price transparency, communicate with trusted suppliers in real time and get your value for money.
When you join the Container xChange family, you’re using the smart way of managing xChange related finances. This means you’ll gain access to an xChange wallet where all your finances will be handled accordingly. Have only one payment partner, approve invoices online and get your payments credited in real time.
Sounds like a win? Well, click on a banner below and join today.
Freight consolidation FAQs
What is freight consolidation?
Freight consolidation is the process of multiple shipments combined by a shipper within a region. Usually into a single load hauled by a carrier to a destination region.
What are the benefits of freight consolidation?
Some benefits of freight consolidation include improved flexibility, stronger customer relations, cost effectiveness and increased consistency.
How can consolidated freight be shipped?
Consolidated freight can be shipped via rail, road, air or sea.
