A Guide to Consolidation in Logistics

Consolidating freight describes the process of merging multiple orders or loads into a single shipment bound for one destination. Typically an operation performed at distribution centers or in warehouses, consolidation allows for a more efficient use of a business’ resources and reduces strain on carrier capacity.

It’s a particularly useful approach when managing numerous smaller shipments, or for shippers looking to limit package handling times and carbon emissions. When a sale, promotion or some other market event suddenly slams a business with high volumes of small orders, consolidation can serve as a fulfillment and delivery strategy.

Why Consolidate Freight?

The smoothest supply chains are those that avoid putting goods in vulnerable positions. Since consolidated freight packs multiple small shipments into larger loads heading for a common destination, the risk of missing a delivery window or losing freight in transit is low.

Here’s how consolidation can benefit both shippers and carriers:

• More efficient resource usage lowers shipping costs and maximizes vehicle space.
• Fewer stops and minimal handling reduces the risk of freight damage or theft.
• Uninterrupted shipping supports more on-time deliveries and satisfied customers.
• Utilizing fewer trucks for product delivery reduces environmental impact.

How Is Freight Consolidated?

Though consolidation can apply to ground, sea and air delivery, we’ll focus primarily on consolidation in truck-bound transport.

Less than Truckload (LTL) Services

LTL is often the most cost-efficient method for moving smaller parcels, as customers are only required to pay for the truck space they need. Products too large for the postal service (anything weighing more than 150 lbs) but not large enough to necessitate an entire truckload can potentially benefit from an LTL approach. It’s also more fuel efficient for the carrier (yay!) and many third-party logistics companies offer to manage LTL shipments as part of their services, including yours truly.

The downsides to LTL shipping stem from unpredictable delivery schedules and the numerous loadings, unloadings and re-loadings LTL cargo experiences at each stop along its route.

Full Truckload Services (FTL, TL, or OTR)

Most people probably picture FTL freight onboard a 53’ dry van trailer, but refrigerated and open deck trailers are also considered full truckload shipments. When utilizing FTL, the shipper reserves the entire capacity of the truck even though they may or may not fill every inch of the trailer. You’ll want to use FTL when:

• You’re shipping more than 12 pallets at a time.
• Your product is delicate or fragile.
• You require firm pick-up and delivery times.

Cross-Docking Services

Cross docking skips the need to place goods in long term storage, transferring them instead from inbound to outbound vehicles. This occurs within a “distribution docking terminal,” a facility split between inbound and outbound terminals with minimal storage space in between. It’s a process often used when short on time or funds, as it limits the costs associated with warehousing and lowers potential for damaged inventory.

What’s the Difference Between Consolidation and LTL?

Industry lingo can get a bit tricky here, since LTL and consolidation appear to achieve the same end. The key difference lies in how they reach their destination.

The LTL hub-and-spoke approach moves goods through a network of terminals, re-loading the cargo onto trucks multiple times throughout the journey. LTL consolidation merges loads from different shippers onto one truck and delivers these goods directly, without intermediate stops at various terminals and hubs.

You might also hear terms like partial and shared truckload enter the discussion. Partial truckloads don’t fill an entire truck (which makes sense), but in some cases, the added cost of sending a partially-full truck is offset by the speedy delivery time, less frequent stops and fewer hands potentially mishandling the load.

Shared truckloads combine shipments from multiple shippers into one truck (like LTL) but with just one stop on its delivery route. Shared loads balance the speed of full truckload shipping with some of LTL’s cost-sharing benefits. Still, they are only available in certain destinations and require extremely tight coordination to avoid mishandled or misplaced goods. Costs also vary widely, as rates are determined on a case-by-case basis.

Are There Downsides to Freight Consolidation?

Consolidation can make it more difficult to forecast when each delivery will be made, or even where it’s located inside a loaded truck. Though tracking tech can aid with keeping ETAs current, this unpredictability won’t work for every shipment.

This challenge is often amplified by extremely tight lead times — consumer tolerance for uncertain delivery windows is shrinking fast, and orders are often expected to arrive within 24 hours of purchase. Freight consolidation can complicate delivery timelines with unexpected delays as carriers await more cargo to make the route worthwhile.

Refining Your Freight Consolidation Strategy

As with any shipping master plan, freight consolidation’s usefulness depends on details specific to your business. When building a strategy for consolidated shipments, take stock of the following:

5 Tips for Successful Freight Consolidation

Adding consolidation to your list of available shipping stratagems is a great way to save time and money, but only if applied correctly. Here are five keys to making the most of consolidation:

1. Keep track of all documentation. When shipping products from several merchants, you’ll want to have a consistent process for tracking paperwork. You’ll need a separate BOL for each shipment, as well as one loading list.
2. Integrate all of your supply chain systems. Make sure all your apps, tech and tools work together to maximize visibility for every shipment.
3. Use tech as much as you can. Mitigate human error by choosing worthwhile tracking systems (TMS) and warehouse management systems (WMS), or by partnering with a 3PL provider with those things already equipped. A fully integrated TMS is your best friend when it comes to consolidating freight, while WMS platforms help manage the products in your warehouse. A good WMS will help determine how much product you have, where it’s located in your warehouse, how long it’s been there and if a delivery calls for cross-docking.
4. Follow a routing guide. Be sure all of your shipments are sent out in trucks to optimize routes and delivery.
5. Work with a third-party logistics provider. 3PLs are consolidation professionals. Partnering with a trusted 3PL brings all the benefits of consolidation without the management headaches.

Partner with an Expert

Consolidation isn’t just for small companies hoping to save on a few light shipments; some of the world’s largest movers of freight apply inbound consolidation techniques from their major hubs in the Midwest. Utilizing freight consolidation to address last-mile challenges and cut transportation costs is also common practice for several massive warehouse distribution centers.

No matter the size of your business, freight consolidation is a worthy tool to keep at your disposal — and First Call can help. Partnering with our experienced logistics professionals grants access to cost-saving shipping strategies unique to your business and a first line of defense against the common challenges that plague your supply chain.

Contact us today and learn how First Call can add consolidation to your logistical repertoire.