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Consumer Goods Logistics Blog


Retail Consolidation: A Freight Strategy Whose Time Has Come

Published by Alex Stark on October 08, 2015

When it comes to retail consolidation, there is one thing that keeping you from shifting a large portion of your freight from costly, less predictable LTL shipments to lower-cost, predictable truckload (TL) shipments.

Volume.

You could hold freight until you had enough to fill a trailer, but retailers today want smaller, more frequent orders. There goes that idea.


So what's a mid-sized shipper to do?

retail consolidation imageThe answer is simple and hard at the same time. The hard part of retail consolidation is actually developing these co-loading relationships and coordinating the details. That's where 3PLs come in.  With a new collaborative distribution model, 3PLs are the matchmakers. They bring like shippers together, apply sophisticated technology to manage the process, coordinate with retailers, equitably parse out freight savings among shippers, and share shipment detail information across suppliers and retailers.

The simple part is to combine your volume with other nearby companies shipping to the same mass retailers and grocery chains for direct delivery. Everyone wins. Suppliers like you pay only for your share of a less-expensive TL shipment. And retailers receive loads on time and get the same volume of goods in fewer, fuller loads to keep their dock bays open and cut labor costs. See a short video on the retail consolidation process.

Which are the right 3PLs to drive retail consolidation?

Look for 3PL partners that serve other companies like yours shipping to the same customer base. By co-locating your inventory in the 3PL's shared warehouse, retail consolidation becomes easier and is driven largely by technology. Transportation management systems analyze ship-to points and requested arrival dates across customers and helps schedule consolidated loads. 

The financial benefits of shifting from LTL to TL

Shifting your outbound distribution shipments from LTL to TL through freight consolidation can cut 25% to 35% from your former LTL cost. In one lane, Sun-Maid found that a collaborative approach reduced its cost per hundredweight by 62%. 

 Other benefits of switching from LTL to TL:

  • Predict your costs better. Compared to LTL carriers, TL carriers are far less likely to hike your rates year after year. 
  • Understand your rates. TL carriers base their rates simply on miles traveled and the weight of the load. Nothing like confusing LTL pricing formulas.
  • Reduce inventory carrying costs. The LTL model depends on moving freight through different terminals and holding it there to fill a trailer for its next move. Consolidated TL shipments go direct to the customer, reducing days in transit and increasing the reliability of your distribution network.
  • Reduce risk of loss or damage. Damage rates are higher for LTL shipments due to the increased handling.
  • Reduce your carbon footprint. Collaborating to send the same volume of freight using fewer trucks reduces truck miles, fuel use and emissions.  

For more on how collaborative freight strategies are creating greener, lower-cost alternatives to LTL, read our paper "LTL Secrets Revealed." 

 LTL-secrets-revealed-CTA

 
 

Filed under: Collaborative Distribution