Inefficient shipping can increase your company’s costs and have a big impact on your company’s profit. Using freight consolidation services to streamline your logistics within your supply chain can give you big rewards.
What is a consolidation service?
A consolidation service combines all your company orders into one shipment for accurate and efficient shipping. There are two main consolidation service types as outlined below.
1. Supplier consolidations
This is one of the simplest options – if you order regularly from the same supplier you can request they hold and consolidate your orders into one shipment.
This can be based on factors such as:
Time– a shipment once a week or once a month of all your available orders
Volume or Weight – ship once the available orders reach a certain size of shipment e.g. a pallet of 300kgs
As a supplier this can easily be implemented at minimal cost as a value added service for your customers. Offering your customers consolidation services will save your customers additional shipping costs and helps grow your professional relationship.
In my role within international logistics this option is very popular and saves our customers time and money in shipment planning.
2. Shipping agent consolidation services
If you order from several different suppliers you can arrange with a shipping agent for a warehouse consolidation service. Your suppliers would ship to the shipping agents warehouse, the orders would be consolidated (again according to your specifications or instructions) and shipped as one shipment using the shipping agents services.
This is moving towards what is now called 3PL (third-party logistics). In a 3PL scenario your shipping agent is acting as your company warehouse and can provide services such as consolidation services, warehousing and distribution. Not all shipping agents offer a complete 3PL service but should be able a consolidation service to some effect.
How is this beneficial?
Consolidating orders can save you:
Minimum shipment costs– for example, if you have a fixed shipping cost up to 30kgs but you send 3 x 10kgs shipments you could have saved money by sending 1 x 30kgs for the same cost!
Volumetric Costs– large shipments can often be charged at volumetric weight which is higher than the gross weight. If this is the case ensure you have as many orders as possible packed in the shipment to make the shipping cost viable.
Customs Clearance / Deferment Fees– if you ship from outside of Europe you will be charged a customs clearance cost (and deferment fee cost if you don’t have your own account) per shipment. Customs clearance cost can be around £35-£50 per shipment so reducing the number of clearances taking place can give you a saving straight to your bottom line.
Collection / Delivery cost– again another cost that is often charged at a minimum. The difference between delivering a 100kg pallet over a 200kgs shipment can be minimal but delivering 2 x 100kgs will always cost you more.
One off costs like: handling, security, documentation etc.. If you ship one larger shipment it will save you paying these costs several times for smaller shipments.
Surcharges – delivery surcharges per shipment such as non-stackable, oversized freight, fuel, hazardous goods or out of area can all impact the shipment cost.
So, if you purchase regularly from one supplier or several consolidation services are clearly worth considering as part of your shipping review process.