Freight consolidation is crucial for business success and profits due to the immense benefits it has to offer. Increased efficiency, faster delivery, and reduced operational costs make this a preferred option for shipments with low volume.
With the increasing trade and commerce, the demand for containerized shipping from the international market has increased as well. Unavailability of containers, traffic, longer wait time, non-strategic shipping, etc. are various factors that have led to increased shipping charges and freight costs.
And the most affected due to the increased costs are the small and medium enterprises (or SMEs). Majorly because of their low volume of the shipment. Their shipment falls in either of the two categories: Less than Container Load (LCL), or Less than Truck Load (LTL), i.e. the company doesn’t have that many orders to utilize a container fully, thus driving up the operational costs.
What’s the solution to this? Read on to know more.
The Solution: Freight Consolidation and Deconsolidation
In simple terms, freight consolidation is combining several small shipments into one large shipment. This means that a number of 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.
And not only different companies, but 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.
Benefits of Freight Consolidation & Deconsolidation
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. 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:
- Shippers may not have the available resources or contacts for consolidation and deconsolidation. In that case, they would need to outsource the shipment.
- With several touchpoints and service providers, the whole process can be confusing. Different companies can have different destinations. Due to this, the cargo might need to be loaded and unloaded multiple times, increasing the risk of loss or damage.
- Because many shippers are involved, coordination and effective communication can be a hassle.
- A delay in consolidation or deconsolidation can delay the entire shipment, thus, causing late services and delivery.
The huge benefits involved by 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.
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Consolidation and Deconsolidation of freight are the perfect solutions for businesses with smaller shipment volume that are looking for cost-saving, increased efficiency, productivity, and faster speed of delivery. Or even for cargo with different destinations on a single route.
And this process can get much easier once you find a trustworthy partner. With Container xChange’s free Public Profiles building professional relationships between companies becomes more flexible. The ratings, performance reviews and company information with 50,000+ companies from the transportation industry – can be found all in one place. Click on a banner below and join today.