How Freight Consolidation Works

Freight consolidation has become a "norm" in today's warehouses and distribution centers because of the increased demand for consumer-level products. Major retailers throughout the country are putting pressure on warehouses to provide storage and shipping solutions at the fastest times and the lowest costs, forcing logistics experts to find creative ways to meet their demands. In the guide below, we will explore how freight consolidation works so you can see how warehouses are making adjustments in today's society.

What Is Freight Consolidation?

Freight consolidation is a process in which warehouses, distribution centers, and other members of the logistics industry combine freights for multiple companies into one streamlined system. For instance, if freight from multiple retailers are stored in the same warehouse, that warehouse may send out orders for more than one retailer on the same shipment. As long as the ending destinations are close to one another, or one is along the way to the other, the freights can be handled with optimal efficiency.

What Are the Benefits of Freight Consolidation?

The obvious benefit of freight consolidation is the fact that distribution centers are able to maximize their resources. Rather than sending out trucks that are only half full of merchandise, they can pile them to the ceiling with goods for multiple retailers in order to make the most out of a single shipment. This also improves efficiency because shippers are able to carry out multiple loads at once, instead of going back and forth to the warehouses to pick up goods.

In addition to the benefits above, distribution centers are able to lower the costs of their shipments because of the enhanced efficiency. Retailers pay less to get their goods where they need to be, and they often get them faster than they would have in a non-consolidation freight system. That isn't to say that all retailers experience a decrease in transit times, but most do.

Difficulties That Come with Freight Consolidation

Despite the many benefits that come with freight consolidation, there are some challenges that distribution centers have to overcome. Because of the transition to online shopping in America, many retailers are placing smaller orders and requiring faster shipping times in order to meet the needs of their customers. This puts a strain on shipping companies and warehouses alike, and it ultimately increases their cost per pound. In order to correct these issues, distribution centers must combine parcel shipments with freight shipments to maximize their truck space and minimize their overhead.

Another issue that comes with freight consolidation is the amount of lead time – or lack thereof – that warehouses get these days. Before online shopping became a societal norm, distributers had a lot of time to prepare their loads and ensure that they were maximizing their resources. Current demands don't allow for these long lead times, which makes it difficult for logistics professionals to prepare the way they used to. Luckily, the increased volume of orders also makes it easier for consolidators to fill their trucks, and cloud based technology lets them communicate with shippers, pickers, and other workers in real time. The increased flow of communication speeds up the process so they do not need those long lead times anymore.

Finally, these is an issue with cost. Retailers are always looking to increase their profit margins and decrease their costs. They look for ways to pass affordable shipping options onto their consumers because ultimately that will lead to an increase in sales. As long as freight consolidators are able to organize their orders to keep costs down, they can meet the pricing demands from retailers. This is a tricky process, but it is one that comes with great rewards once it is mastered.

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