When your product is ready to hit the road for delivery but your freight volume can’t justify the cost of a full truckload, what do you do? For many shippers, it comes down to choosing the lesser of two evils: ship via costly less-than-truckload (LTL) or wait to build a full truckload and risk missing retailer requested arrival dates (RAD). However, there is a third option: freight consolidation services (or “load consolidation services”) with a third-party logistics (3PL) provider, where your load “shares the ride” with others like yours.
The basics of freight consolidation services
Let’s say you’re going to the airport at the same time as several of your neighbors. Does it make more sense for each of you to spend the money, time, and energy to drive there separately, or to share those expenditures by hiring a van to transport everyone? If the latter option seems like a no-brainer, then freight consolidation could become a go-to strategy for your supply chain.
If your products are stored in a 3PL warehouse, ideally that 3PL will have a dense concentration of customers shipping to the same retailers as you. In this case, you can think of the 3PL shared warehouse as the neighborhood where your products lives alongside those of other companies. For orders destined for the same retail DC, the 3PL will consolidate the collective loads in to one truckload and head off to a pool distribution facility for last-mile delivery. You save money by splitting the costs instead of paying for LTL yourself; you save time by not waiting to build a full truckload; and you reduce carbon emissions by combining multiple shipments into one.
Freight consolidation is also an option for companies whose products are not housed in a shared warehouse. In these cases, loads can be picked up en route and included in the consolidation program
How loads are built
The 3PL typically receives orders electronically (e.g., EDI) and the information is fed in to the 3PL’s warehouse management (WMS) and transportation management systems (TMS). The Load Consolidation Manager will then match the order to other orders based on its destination, size, weight and other requirements (e.g., refrigerated or non-refrigerated) and create the load. A Traffic Manager will then assign drivers (if asset-based) or a for-hire carrier and schedule the load to ensure that the RAD date is met.
The full truckload will then be transported to a pool distributor for last-mile delivery. In most instances, the load will head to the pool distribution center directly. Sometimes, however, if an order is big enough (typically over 8,000 pounds) there will be a stop-off at final delivery location on the way to the pool distributor. This results in additional cost savings for the shipper of the large order, as there are costs associated with the pool distribution service.
Advantages of Freight Consolidation Services
In addition to the cost- and time-saving benefits referenced above, load consolidation has several additional benefits:
Optimal service levels. Many 3PLs live and breathe freight consolidation daily, enabling their associates to develop expertise on your products and routes, and to develop relationships with the pool providers that will be handling your last-mile delivery.
Fewer touches. With load consolidation, your product is only touched twice before it reaches its destination. Once by the 3PL and once by the pool provider. Conversely, an LTL shipment could involve multiple trucks – and thus multiple touches – during its journey which increases the opportunities for damage to occur.
Quicker delivery times. In addition to avoiding the time of building a full truckload yourself, you’ll experience quicker delivery times with freight consolidation services as there are typically no stop-offs (again, infrequently, there may be one for a very large order but only one; LTL will likely involve multiple stop-offs). A cross-country shipment, for instance, will typically take anywhere from 6-10 days with LTL but only 3 days using load consolidation.
Sustainability. By sharing the ride and using one truck instead of multiple trucks separately, you reduce carbon emissions as well as congestion.
Visibility into your order. 3PL systems (e.g., TMS and WMS) allow for real-time visibility into your order’s location and provide notifications for key events such as deliveries.
Pricing simplicity. Instead of using complex algorithms to determine how much your LTL carrier will charge you, you can rely on simple straightforward pricing with the 3PL consolidating your load. The rates are based simply on miles traveled and the weight of your load. Whether you’re shipping paper clips or huge end cap displays, it’s easy to figure out what you’ll pay.
Kane Is Able Freight Consolidation Services
Based in the Northeast, KANE’s load consolidation program helps its customers cut retail distribution costs by over 20% compared to LTL. Our shared warehouses have a large number of consumer goods manufacturers that routinely share the ride to the same retailers you deliver to. To learn more about KANE’s freight consolidation services, contact us today.