Why LTL Freight Consolidations is Considered best Shipment Method | LOTUS Containers
You might have noticed the newspaper boy carrying bundles of newspapers and knocking at everyone’s door. Did you ever question him that why doesn’t he bring newspapers separately for you and your neighbors? Why he carries all of them at once? Yes, it might seem rubbish and especially when you already know the answer. Bringing newspapers separately for hundreds of families living in the same locality does not make sense at all. The same goes for the freight and cargoes that are shipped across the sea over the road and on the rail crossing domestic and international boundaries. How? Well, that’s through the consolidation.
For an instance- Let’s say you loaded your goods in a 20’ shipping containers but the container demands for more good. What will you do then? You can have two options- either you ship it in half-filled condition or you share the leftover space with another shipper. Wouldn’t be it amazing to utilize the complete space of a container rather than shipping it half-filled? When you propose another shipper waiting at the port to use the empty space of your container, it is called consolidation.
Note- the shipment is called ‘LCL- Less than a Container Load’ in case of sea transportation & ‘LTL- Less than a Truck Load’ in case of road transportation).
Definition: Consolidation is a method of combining multiple LTL shipments from various shippers into one full container shipment to efficiently utilize the available space.
How the need is generated?
The third-party logistics company after receiving orders electronically fed shipment related details into the Warehouse Management System (WMS). WMS is a cloud-based system designed for the 3PL companies to manage hundreds of customers, and their shipment, etc.
They then match the order to other shipper’s orders based on the freight types, sizes, and destinations to be transported. The matched goods are then consolidated and loaded in one container. The full LTL is then transported to a pool distributor for the final delivery.
What advantages does it offer?
Quality Service: The 3PL service providers after having been offered consolidations services to hundreds and thousands of customers become veterans. The way they segregate and assort freight based on several classifications enables them to offer a high quality of services. Their relationship even gets stronger with other supporting parties like transport providers, pool providers, etc who handle your cargoes after leaving the sight of your 3PL.
Higher Safety: Less number of times the containers are loaded or unloaded, higher the safety it offers. When you go for consolidation, your cargo is touched only twice during the overall transition- once by the 3PL during the load and once by the pool provider at the port of destination. While a normal or LTL shipment involves multiple touches because of multiple trucking and cross docks during the entire journey. Each touch further increases the chance of damage & loss. But this does not go when you’re consolidating.
Quick Delivery: Waiting for your container to be fully loaded is one of the biggest problems faced by the shippers especially when it starts eating a lot of time. Consolidation allows you to combine and load multiple freights in a truckload moving towards the same destination. So you do not have to wait long for your container or truck to be loaded fully. Even if you have goods in less quantity, it can be shipped with ultimate care without having you wait for long. Where a cross country shipment takes 5 to 10 days a consolidated shipment could ship it within half of the time. Shippers also get quicker deliveries because it does not go through the LTL hub or the spoke networks.
Cost-effective: Another factor why freight consolidation attracts much attention from shippers is the pricing. How amazing it would be if you and the other shipper waiting out avail the mutual benefit by sharing the same container space! This goes with freight consolidation. While FCL or LTL shipment obliged you to pay for the entire container space through freight consolidation you only have to pay for space or pallets you acquire. The rates are determined only based on your cargo weight and distance to be traveled. The total truckload shipment price is distributed and shared by all the shippers combining their cargoes.
Ecologically Sound: Combining freight into one truckload has a great positive impact on environmental sustainability. LTL consolidation enables multiple shippers to load their goods in a single truckload, therefore, reduces the need for individual truck transportation for every shipper. Lesser truck means lesser carbon emission and lesser road congestion- giving a way to a sustainable mode of shipment.
Transparency: Every shipper wishes to have 3PL offering a transparent shipment. Thanks to the evolving technologies and top-notch software that have made it possible now. But still, in LTL shipment, tracking and tracing of cargoes feel to be daunting as each shipment has its unique tracking code and number. While in freight consolidation, multiple shipments ride on a single tracking number which is broken only at the final point of delivery. The Transportation Management System or TMS helps 3PL companies to provide real-time insight into the entire freight transition until it reaches the destination. Shippers keep on getting notifications for key events such as location, deliveries, etc.
Avoid Congestion: LTL freight consolidation not only helps in avoiding congestion on the road but also at warehouse and pool distribution centers. In LTL shipment, the amount of goods keeps on stocking up with a long line of shippers waiting for a completely empty truckload. And in freight consolidation, since shippers do not have to line up for a separate truckload and no multiple trucks are coming and going out of the dock. The warehouse and the dock remain congestion free allowing space for new goods.
Fewer Carrier Relations Required: Logistics Service Providers work with strong software tools like Transportation Management Software (TMS) that enable clients to track and locate their shipment anywhere anytime. They manage most of the operations with the help of strong TMS. This is why most of the shippers prefer to contact LSP instead of hiring multiple parties for transportation, containers, etc. LSP provides all services under one roof. They have other service providers like freight forwarders, transportation operators, shipping container suppliers, etc working for them.
CHALLENGES ENCOUNTERED
Requires Strong Planning: Wherever a complex task is served in a simplified manner, it is understood that strong planning must be going at the back-end. And freight consolidation is no more abandoned from this. It requires a lot of planning both from the shipper’s side and the carrier side. Where one side carrier has to arrange and segregate all the cargoes based on types, size, location, etc shippers also need to be extra careful while determining prices, dimensions, timing, etc.
Finding the Right Carrier: Yes, consolidation eases your shipment but only when you are successful in finding the right carrier company. Due to added complexity, not all carriers are willing to offer this service and those who offer may not be serving quality. It’s critical that you give your enough time in searching for the right carrier company to make sure you save on shipping.
Time-Consuming: Although consolidation shipment reduces the transit time and adheres to quick delivery, prior planning eats up a lot of time. Due to additional planning and arrangement of cargoes, it takes more time than other FTL methods. Therefore, not always but it sometimes becomes time-consuming.
Should I go for consolidation shipment?
No doubt, it’s an amazing method for freight transportation but you really need to keep a few things in mind before making a final decision. The first and foremost thing you should look at is your freight size. Will it need a full truckload/container or it can be adjusted well with other shipper’s consignment. The second thing to consider is the reliability of the carrier company you’re approaching. Is the price reasonable? Take your time and ponder upon every factor and then approach a versatile LSP.
