We live in an on-demand world. Consumers are increasingly used to having their food, entertainment, and even packages the instant they want them, which has driven a steady growth in online retail over the last 10 years. In 2019, online retail purchases accounted for 16% of all retail.
What does this mean for shippers? Consumers and sellers expect them to make many small deliveries to homes and offices rather than a few large deliveries to major retail stores. Unfortunately, delivering all these small shipments is inefficient. Large trucks may pull half-empty trailers for much of their route, wasting space and increasing carbon emissions.
Consolidation Can Help
Consolidation is a logistics strategy in which multiple shipments headed for a particular region are combined in a single large container. Once the large container reaches the area, the contents are broken down into smaller shipments and forwarded to their destination.
There are a few different ways to maximize consolidation:
1. LTL Zone Skipping
Shipments that don’t fill an entire trailer are known as less-than-truckload (LTL) shipments. LTL zone skipping is the most basic consolidation technique. Shippers combine all the shipments headed to a region into a single shipment delivered by a long-distance carrier.
Once this shipment arrives at its destination, a full-service logistics provider distributes the cargo locally. Shippers at both stages of the process are trusted to use their different expertise efficiently.
2. Multi-Buyer Consolidation
Retail stores sell products from many vendors. If every vendor delivered their own shipments to every location, it would be inefficient. Most small vendors don’t bring enough products to a store to fill a truck or trailer. In the multi-buyer consolidation model, each vendor delivers their products to a regional facility, which then loads goods from multiple vendors and ships full truckloads to each location.
3. Single Buyer Consolidation
Because of scheduling and other considerations, a single vendor may send multiple shipments to a single retail outlet. Many of these shipments are not large enough to fill entire trucks, so a vendor’s loading dock may end up crowded with many trucks and trailers, reducing efficiency for everyone. Single buyer consolidation depends upon the vendor’s willingness to wait to ship their products until they have enough to fill a truck at once.
Consolidating truck shipments saves shippers time and money. It requires forethought, planning, and cooperation, but the efficiency benefits make it worthwhile. Advancing technologies such as transportation management systems are helping carriers decide which consolidation strategy is most useful for a given situation.