Shipment Consolidation
Also known as: Freight Consolidation, Load Consolidation, Cargo Consolidation
Definition
Shipment consolidation is the practice of combining multiple smaller shipments into a single larger shipment heading to the same destination. This approach reduces per-unit shipping costs by taking advantage of volume discounts and more efficient transportation.
Types of Consolidation
Buyer Consolidation
Multiple purchase orders from different suppliers combined:
- All suppliers ship to consolidation warehouse
- Goods combined into single shipment to destination
- Common in international sourcing
Seller Consolidation
Multiple orders going to same region combined:
- Orders for nearby destinations shipped together
- Deconsolidated at regional hub
- Last-mile delivery to individual addresses
Cross-Dock Consolidation
Shipments combined in transit:
- Goods from multiple origins meet at hub
- Sorted and combined for outbound
- No storage, just transfer
Cost Savings Example
Without consolidation:
- 3 LTL shipments at $500 each = $1,500
With consolidation:
- 1 full truckload at $900 = $900
- Savings: $600 (40%)
When to Consolidate
| Good Candidates | Poor Candidates |
|---|---|
| Regular shipments to same region | Urgent, time-sensitive orders |
| Multiple suppliers for same buyer | Perishable goods with short windows |
| Non-urgent inventory replenishment | Drop-ship customer orders |
| International import shipments | Single-item orders to unique locations |
Consolidation Services
- Freight forwarders - International consolidation
- 3PLs - Multi-client consolidation
- Consolidation warehouses - Dedicated facilities
- LTL carriers - Hub consolidation networks
Considerations
- Additional handling at consolidation point
- Added transit time for consolidation
- Coordination complexity
- Risk concentration in single shipment
- Deconsolidation costs at destination
Metrics
- Consolidation ratio - Shipments combined per consolidated load
- Cost per unit - Shipping cost after consolidation
- Cube utilization - Container/trailer space used
- Consolidation delay - Extra days for consolidation process
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