5 Benefits of Freight Consolidation

Recently, customer requirements have become increasingly more challenging, particularly due to their experiences with same-day or next day deliveries of packages to their homes.

In response to ever-changing customer expectations, shippers are seeking any potential method that may improve the speed-to-market and accuracy of their shipments—all while controlling costs in their supply chain.

To meet such demands, shippers are seeking partners and alliances to consolidate their freight—by combining less-than-truckload (LTL) freight with other shippers, resulting in a single full truckload shipment. Consolidating freight from multiple shipments into a full truckload shipment can deliver efficiencies and lower your total transportation spend. 

Among other positives, a successful partnership with a 3PL can (perhaps most importantly) help optimize your transportation spend and increase your bottom line. Here are 5 potential benefits, in particular, that can be realized through a freight consolidation program.

5 Benefits of Freight Consolidation

1.  IMPROVE YOUR CUSTOMERS’ SATISFACTION

One of the top priorities for shippers is to ensure their customers receive their items quickly and at a reasonable cost. Your customers expect you to manage their freight responsibly and deliver it within their specified timeframe.

To reduce your exposure to claims, enhance your productivity, and reduce your costs, consider implementing a freight consolidation program. By consolidating multiple shipments into fewer trucks, you can reduce the number of trucks that arrive at your customers' docks, while also streamlining delivery appointments and improving unloading efficiency. This can lead to improved customer satisfaction and fewer administrative tasks for you to manage.

2.  ENHANCE THE CONSISTENCY OF YOUR SUPPLY CHAIN

By consolidating your shipments, you have the opportunity to identify any recurring patterns or orders from your clients. Incorporating these into your consolidation plan can improve the consistency of your supply chain and reduce the risk of late shipments, misplaced products, and customer dissatisfaction due to inadequate goods or services.

“A consolidation plan drives order and consistency to your shipping schedule, enabling you to plan and communicate effectively to your customer with an understanding that your weekly variability is reduced through leveraging the scale of multiple shippers.,” says Dave Giblin, Vice President of Operations, ODW Logistics.

This scheduling approach can help ensure that your customers receive their items on time and meet their expectations, leading to greater satisfaction and loyalty.

3.  TAKE ADVANTAGE OF RELATIONSHIP SYNERGIES

Volume. Product mix. Seasonality. Buyers. These are just a few of the items that will impact your financial figures on a short- and long-term basis.

“By partnering with a 3PL, you can take advantage of any potential relationship synergy,” Giblin says. “You must ensure your 3PL understands your transportation goals and has the technology and infrastructure required to deliver you savings through a freight consolidation program. While consolidation may not be rocket science, there are many moving parts to manage. A lack of investment in people, technology, tools or continuous process improvements will be exposed immediately, as a result.”

4.  ACHIEVE SCALE AND COST SAVINGS

If your business is mid-sized or frequently ships Less-than-Truckload (LTL), you are likely familiar with the difficulty of achieving the necessary shipping volumes to achieve scale and cost savings. Fortunately, you can overcome these obstacles by pooling your shipments with those of other companies and leveraging your transportation costs. By consolidating your shipments with others, you can maximize cost savings and achieve economies of scale that were previously out of reach.

Freight consolidation enables you to benefit from larger shipment sizes and negotiate lower rates with carriers, resulting in substantial cost savings. Additionally, sharing transportation resources with other businesses can help you to streamline your supply chain and reduce your environmental impact. By achieving economies of scale, you can increase your bargaining power and negotiate more favorable rates for shipping services. This can help you to maintain competitive pricing while also improving your margins and overall profitability.

5.  SHIP SMARTER AND MAINTAIN YOUR RELATIONSHIPS

Efficient shipping requires maximizing the cube and weight of each trailer. By collaborating with other businesses, you can significantly improve your ability to optimize trailer space utilization. For instance, if your company ships ping pong balls and a neighboring company ships golf balls, you have the potential to work together to create more efficient loads. This concept can apply to any businesses that transport less-than-truckload freight, regardless of their respective industries.

To benefit from this approach, it is essential to have a team of experts with engineering knowledge to design the best consolidation plan for your specific requirements. While most third-party logistics (3PL) companies have Transportation Management Systems to schedule your transportation, you will still need a team with industry expertise to match your needs with those of other clients and develop successful consolidation plans that meet your customers' expectations. By leveraging the knowledge and experience of a proven team, you can optimize your shipping operations, maintain strong relationships with your customers, and achieve sustainable business growth.