Freight consolidation services are in the business of getting more goods moved at a fast pace and into customers’ hands. It isn’t a secret that shipping has become more expensive. As a nation, we come to a standstill if freight stops moving. Keep goods moving with freight consolidation services that make shipping affordable and reliable.
Freight consolidation services enable shippers and carriers to combine multiple loads and parcels into single shipments. Consolidated services can be provided through Less-Than-Truckload (LTL) or Full Truckload (FTL) shipping options. A consolidated shipment may be less expensive and reduce the amount of damaged freight.
Find out more about freight consolidation services and how they can improve your supply chain consistency.
What Do Freight Consolidation Services Provide?
Freight consolidation services are geared towards finding solutions to keep freight moving. In our times, this is easier said than done. Rising fuel costs and production delays, among others, have made even small parcel shipping a significant expense for some businesses.
With freight consolidation services, multiple shipments can be combined and shipped at the same time. In many cases, the freight of more than one business can ship at once. This eases the cost burden on individual businesses because fees associated directly with fuel and driver fees can be divided among multiple payees.
Fuel costs, for example, are the same for a trip from Los Angeles, California to Memphis, Tennessee, whether a trailer has skids from one company or ten.
If your business does more parcel shipping, consolidated freight services can still help. Another aspect of the service is helping companies combine small parcel shipments into one larger one that could qualify as freight within an LTL carrier service. A single LTL shipment may provide more cost savings than frequent, smaller shipments.
If you need multiple shipments sent to the same location, you can also look into pool distribution and learn about more ways to consolidate freight.
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How is Consolidated Freight Shipped?
A variety of shipping avenues means there are a variety of freight consolidation solutions too. LTL shipping typically offers the greatest benefit for those who need to move smaller shipments quickly.
Within LTL services you have two options:
- Consolidated LTL
- Hub and Spoke LTL
Both methods combine goods from more than one client in a single trailer for transport. However, hub and spoke LTL will make stops along the route to drop off and pick up more merchandise. Hub and spoke is also more likely to utilize a central location and handle deliveries in the surrounding area within a day.
Consolidated LTL will process deliveries through a consolidation warehouse. These warehouses will package items so that they can be transported directly to the destination. No stops in between means goods can travel a longer distance faster.
Finally, there is partial truckload shipping (PTL). If you have too many items to ship via LTL, but can’t quite justify an FTL service, this may be for you. With PTL, two companies share space. The cost of the FTL service is divided between them. Freight doesn’t have to go through freight classification or NMFC (National Motor Carrier Freight Classification) number look-ups.
What Types of Consolidation Services Are Offered?
Within both FTL and LTL shipping options, there are warehouse services specifically offered for consolidation. These services work together with truckload shipping options and can include rail and air services where possible.
The most popular consolidation services are cross docking and transload. Both have been used to get containers out of ports faster to relieve congestion. Better yet, the increased need for such services has made them more widely available.
Transload Consolidation Services
Transload services are offered at special facilities that can prep and store shipments for continued transport on trucks, railways, planes, and even ships. The U.S. is a big place and different methods of transportation need to be used sometimes.
Special equipment is needed to meet the needs of so many different transportation services and locations need to be by major intersections of highways and railways.
As a consolidation service, transload facilities can receive containers directly from ports and railways (depending on location) for sorting and re-packing. Shipments are then placed on whichever form of transport is needed and sent to final destinations.
There is no one way to transload. Shipments might go from port container to railway or from railway to truckload service. The goal is to find the most efficient method and to keep goods moving.
If deliveries are scheduled for the winter, especially along the northern border or directly into Canada, transloading may help you avoid foul weather. There are situations where transport by railway is going to be safer and faster. Transload facilities can make that happen.
Cross Docking Consolidation Services
Warehouses that offer cross docking services follow a similar delivery pattern to transload. Cross docking warehouses operate as central locations that can send out shipments to surrounding areas via LTL or FTL shipping.
Facilities can unload loose boxes for sorting and palletizing to their individual destinations and save shippers on the cost of sending one container to various places. Shipments are meant to move in and out of warehouses quickly to keep things moving.
There are instances where cross docking facilities will break down pallets to divide their contents into smaller deliveries. This may seem the opposite of consolidation but may save you money in the long run. Hub and spoke logistics come into play and goods can be delivered to opposite places at the same time.
Done well, cross docking consolidation can also reduce the need for large warehouse space. With current rates, warehouse space will often end up costing more than cross docking or transload services.
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How Does Consolidated Freight Impact Shipping Costs?
In basic terms, consolidated shipping allows a variety of goods to be transported without the need for a variety of trucks. If every company went for FTL shipping, carriers would either need to have a significant number of drivers always working or have long wait times for customers needing shipments done.
Both scenarios create a price hike for operating carriers, freight forwarders, and businesses. The smaller the business, the heftier the price tag to offset the cost of a mostly empty trailer.
Consider just the impact on fuel. The average semi-truck with a full load gets six miles to the gallon. Across the country, the average cost of diesel fuel is now $4.50 a gallon. The trip from Los Angeles, California, to Memphis, Tennessee is 1,800 miles. In fuel alone, that is $1,350 for a one-way drive.
Fuel Calculation
| Distance (miles) | Miles per Gallon | Average Fuel Cost (Diesel) | Total |
|---|---|---|---|
| 1,800 | 6 | $4.50 | $1,350.00 |
If only one company is using the trailer, the full cost of fuel is likely averaged into the final price. If that were to be divided among five different companies, the price would go down.
Divided Fuel Costs
| Total Costs | # of Different Shippers | Cost Per Shipper |
|---|---|---|
| $1,350.00 | 5 | $270.00 |
While very simplified, this shows that dividing shipping costs can bring down rates for individual businesses. Other factors, such as tolls, truck maintenance, and driver payment can all be treated the same way.
What are the Advantages of Consolidated Freight?
The advantages of consolidated freight will depend on your shipping needs. It will also be impacted by the type of freight consolidation service you contract with. As companies grow, shipping needs to change. Don’t be afraid to adjust your business practices accordingly.
Across the board, benefits include:
- Cost-effective solutions: In general terms, LTL consolidated shipping is likely to be less expensive because the costs related to running a truck and trailer can be divided.
- Reduced damage: When using consolidated LTL, your merchandise stays together in the trailer until arriving at the set destination. Less handling means less chance of damage.
- Keeps goods moving: Rather than waiting for enough of a shipment to make a full truckload, consolidation services can keep goods moving out of port and on route to customers or distribution centers.
- Sustainability: You’re doing your part to reduce carbon emissions by helping carriers have fewer trucks on the road at a time.
Most freight consolidation services are arranged through 3PL warehouses. These advantages and more could be available to you. When 3PLs offer freight consolidation, they often do so through specific consolidation warehouses.
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What is a Consolidated Warehouse?
Not all warehouses are capable of consolidating large amounts of single shipments into freight. For 3PLs to offer freight consolidation services, utilizing a consolidation warehouse is a must.
In these consolidation centers, often located near major ports, package processing is set up to match common shipments together. As merchandise comes in from the port, either directly or through transload and drayage services, it gets combined with other packages from the same business.
Now able to qualify for freight shipping rates, loaded skids and pallets are placed on a truck with others heading to a common destination. The goal is to send out a full truckload shipment that can be priced per mile and weight rather than by individual commodities.
From there, they may be delivered directly to the business or to another partner warehouse. If the consolidated freight needs to be broken down for individual deliveries in the new location, that might be a local fulfillment center.
An established 3PL service will have shipments from several businesses coming through. This may increase the chance of multiple shipments heading to a common destination.
What are the Disadvantages of Consolidated Freight?
No freight solution is perfect and consolidated shipping has its drawbacks as well. When choosing a shipping method, always look at both to see how well your business needs align with the services offered.
Possible disadvantages include:
- Extended lead times: Needing to wait for enough merchandise to be able to consolidate and then possibly needing to de-consolidate shipments for final delivery may cause delays if not well managed.
- Limited carriers: Finding a carrier who will wait as a warehouse is combining multiple LTL shipments to create full truckloads may be difficult. Some carriers may also still wish to apply LTL freight classes rather than being charged by the mile.
- Complex management systems: A consolidation center needs a Transportation Management System (TMS) that can handle the data input. Subpar systems may result in lost freight and longer delays.
If consolidated freight services seem like the right step for your needs, be sure to work with an experienced 3PL with proven experience in freight forwarding. Many of the disadvantages of consolidated freight can be reduced when you partner with the right 3PL.
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How Can Freight Consolidation Solutions Optimize my Supply Chain?
Managed correctly, freight consolidation services can protect your supply chain and reduce inventory shortages. Before shipping delays became a chronic problem, it was common to keep all inventory in one place until needed. However, any disruption in shipping may cut you off from your supplies in that scenario.
Freight consolidation solutions are long-term strategies designed to keep merchandise moving. Many work on an automated schedule to routinely deliver needed inventory. A delay in one part of the chain doesn’t have to shut the entire process down.
Consider these possibilities:
- There can be less immediate inventory on hand because of regularly scheduled consolidated shipments containing a variety of merchandise.
- A delay anywhere in the supply chain can only affect a small part of your needed merchandise. There will always be movement for high-frequency shippers that have new imports arriving.
- Keeping goods moving out of busy ports and into consolidation centers will reduce overall congestion in ports and smooth out deliveries over time.
A freight process that helps reduce your supply chain delays is one that helps everyone’s supply chain problems. Creative solutions in today’s shipping industry can benefit you and everyone else needing to meet their business goals.
Who Can Use Freight Consolidation Services?
The clients who will benefit most from freight consolidation services are those shipping products at a steady rate. Businesses that deal with highly consumable products that need routine re-stocking should be able to set up a good schedule.
Depending on the nature of your merchandise, you may be able to use different types of consolidation services.
- Air Freight: Although more expensive than ocean or ground, if you need to import a variety of goods quickly, air freight is the best. If you only import once or twice a year, it may also justify the higher price.
- Ocean freight: Frequent international shippers can take advantage of consolidated shipping with standard marine containers. These are easily transloaded to local warehouses or even facilities further out.
- Ground freight: Anyone needing to move merchandise domestically can use the LTL and FTL freight consolidation services already discussed.
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Reliable Transportation Management Systems With R+L Global Logistics
Don’t settle for less than the best. R+L Global Logistics can offer 3PL services all around the country with strategically placed warehouses. Freight consolidation services require expert transport and warehouse management systems.
Decades of experience have made R+L Global Logistics an industry leader. Count on us to manage your shipments carefully and get them to their destinations on time.
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Choose a partner that works just as hard as you do. Reach out today for a service quote or call us direct at (866) 989-3082 and keep your business moving forward.
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