Consolidation
Also known as: Freight Consolidation, Shipment Consolidation, Cargo Consolidation
Definition
Consolidation groups multiple smaller shipments heading to the same area into one larger load. It reduces per-unit shipping costs by sharing transportation expenses across multiple shippers.
Types of Consolidation
| Type | Description |
|---|---|
| Buyer consolidation | Combine orders from multiple vendors |
| Pool distribution | Combine for regional delivery |
| LTL consolidation | Multiple shippers share trailer |
| Container stuffing | Fill ocean container with multiple loads |
How Consolidation Works
- Multiple small shipments collected
- Grouped by destination region
- Combined into full truckload or container
- Shipped to distribution point
- Deconsolidated and delivered
Consolidation Benefits
Cost savings:
- Full truckload rates cheaper per lb
- Share container costs internationally
- Fewer individual shipments
Efficiency:
- Reduced receiving volume
- Fewer deliveries to schedule
- Lower carbon footprint
When to Consolidate
- Multiple vendors in same region
- Regular small orders from same suppliers
- High shipping costs on small orders
- Long lead times acceptable
Consolidation Providers
- 3PLs and freight forwarders
- Consolidation warehouses
- Pool distribution services
- Buyer consolidation programs
Trade-offs
- Longer transit times
- Coordination complexity
- Minimum volume requirements
- Less visibility during consolidation
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