Transporting every package to its final destination would put a lot of time and resource constraints on shippers. Instead, it can often be smarter to use freight consolidation to save time, money, and fuel.
Let's break down five major benefits of freight consolidation to shippers, which usually extend businesses and cargo recipients.
What Is Freight Consolidation?
Freight consolidation is a shipping strategy where a carrier combines several shipments in one region into a single load hauled to a regional destination (such as a hub around which many smaller destinations are centered).
Once the load arrives at the regional drop-off destination, it is separated into smaller, original shipments. Those original shipments are then sent to their final destinations.
Here's an example:
- A carrier gets a freight order to transport five packages to five towns around Portland, Oregon.
- Instead of using five truck drivers to deliver all five orders, the cargo is consolidated into a single load, then shipped to Portland.
- Once the load reaches Portland, the freight is separated into five packages again, and each package goes through a local freight shipping route to reach its final destination.
Freight consolidation avoids partial truckload shipping in favor of using as much of a truck’s available cargo space as possible.
Five Benefits of Freight Consolidation
Freight consolidation often brings many positive advantages to shipping companies like yours.
1. Cheaper Shipping
For example, freight consolidation frequently leads to cheaper shipping prices overall. With freight consolidation, you can optimize your logistics and earn preferred shipping rates rather than only using half or two-thirds of the space in a particular trailer.
The more space you use for a given load, the more money you can theoretically make. Improving your bottom line is always a big advantage, especially in an industry like shipping.
Plus, if you consolidate smaller and regional freight, you can avoid paying higher rates to move that freight around (at least before it is split up and sent to its final destination). You can pay bulk rates when you ship freight all at once rather than sending out individual loads.
2. Better for the Environment
In addition, freight consolidation is better for the environment since it uses less fuel. Think about it; it takes less fuel to send one truck 2000 miles, then four extra trucks 20 miles each than it does to send four trucks 2000 miles each.
Reduced fuel consumption not only leads to cost savings, as mentioned above. It also means your shipping business does its part for the environment.
3. Enhanced Safety for Shippers and Cargo
Freight consolidation can further lead to enhanced safety for shippers and cargo. In a practical sense, filling up as much space in a cargo truck as possible means the truck may be easier to handle without cargo moving around in the back.
More broadly, freight consolidation means that cargo is packed tightly together, so it doesn't jostle around in a truck and become damaged. Drivers, meanwhile, drive shorter, more direct routes in general, so they spend less time making long-haul journeys behind the road, feeling exhausted.
4. Greater Control
Then there’s the advantage of having greater control over your cargo when you practice freight consolidation. For example, freight consolidation lets you implement quality control measures were strategies whenever a product reaches a warehouse.
Then, if there’s an issue with one shipment, you can correct the problem rather than having to realize that the shipment has already been sent out and that there’s no way for you to stop it until it has reached its destination.
By implementing more stops between cargo leaving a port in reaching its destination, you have greater control over that cargo and can make course corrections, adjust cargo quantity, etc. More control is always something to pursue in the freight industry, especially as a shipping business owner.
5. Stronger Customer Relationships
Lastly, freight consolidation often leads to improved, stronger customer relationships. When you ship smarter and cost-effectively, you’ll build much better relationships with your clients and your carriers.
For instance, you can work with businesses that use LTL or less than truckload shipping. Or you can develop a reputation for delivering products on time and on budget to smaller businesses centered around a local area, even if your transportation hub is somewhat far away.
Many of the savings you earn by practicing freight consolidation can be passed on to your customers. In this way, they'll pay less for top-tier service and be more willing to come to you for all their future shipping needs.
What Are the Drawbacks of Freight Consolidation?
Although freight consolidation is generally beneficial, there are a couple of challenges or potential downsides to keep in mind when deciding whether to leverage it for your shipping business.
1. Scheduling Can Be Complicated
For one, freight consolidation can make scheduling quite complicated. After all, not all carriers are willing to haul consolidated freight due to cost, available routes, etc. This is partially why partnering with a third-party logistics company like RPM can be smart if you want to take advantage of the cost savings inherent in freight consolidation.
Still, even the most streamlined freight consolidation plans will require you to devise solid scheduling systems to ensure that each cargo piece is delivered on time to its final destination and there aren't any mix-ups.
2. Minimal Lead Times
For another, freight consolidation often has minimal lead times. There’s not a lot of time between when a shipping order is placed and when the order needs to be delivered. Because of this, again, your scheduling must be airtight and well-implemented to ensure the satisfaction of your clients and customers.
The Bottom Line
In the end, freight consolidation is a tried-and-true shipping strategy that most shippers take advantage of frequently. It’s arguably the best way to get freight from one place to another across long distances without expending too much fuel and money. Of course, it also results in packages finally reaching their destinations if practiced properly.
End-to-end transportation companies like RPM can help you realize the benefits of freight consolidation when you partner with us. Our comprehensive network of carriers and clients, as well as our modern and innovative technology, makes us the best transportation choice for your needs. Contact us today to learn more.
Sources:
LTL Freight Quotes, Packing, Tracking and Shipping | FedEx
Why Do Most Consumers Want More Eco-Friendly Shipping Options? | SBEInc.com
How Soaring Shipping Costs Raise Prices Around the World | IMF.org
