What is consolidated shipping? Examples, benefits and how to implement it
In logistics, it’s important to find ways to simplify processes, save money, and still meet customer expectations. There are a lot of strategies to do this, including consolidation. As well as benefiting sellers, consolidated shipping practices also optimise the use of shipping containers or other transport vehicles, reducing transportation costs across the supply chain.
In this article we will break down everything you need to know about consolidated shipping and why it’s important for online businesses.
What is consolidated shipping?
In logistics, consolidated shipping is a practice that involves combining multiple smaller shipments from different carriers into a single larger shipment. This will usually be done by a logistics company and shipments will be based on factors like destination, size and type of goods. For example, packages all bound for the same destination will be gathered together and sent to the same location as one. It is sometimes also referred to as consolidated cargo or groupage.
Once the consolidated shipment reaches its destination it will be deconsolidated and separated for final delivery to their respective recipients. The strategy optimises space utilisation and reduces the overall shipping costs.
Advantages of consolidated shipping
Consolidating shipments has benefits for sellers, logistics companies, and can even support your company’s sustainability goals. Some further benefits of consolidating shipping are:
- Cost savings: By combining many different shipments into one larger shipment, businesses can save on transportation costs as they share the logistics expenses with other companies.
- Reduced environmental impact: The logistics industry is a huge contributor to global carbon emissions, so the fewer shipments going back and forth the better. Consolidating shipments can mean fuel consumption is reduced and there are less emissions, which can help the industry become more environmentally friendly.
- Improved efficiency: Consolidation can help streamline shipping processes, making it more efficient and reducing the risk of delays for individual shipments. Containers and transport vehicles are utilised more efficiently which reduces wasted space and maximises capacity.
- Access to smaller markets: By taking advantage of consolidated shipping services, smaller businesses (or businesses with less inventory) can access different markets they may not otherwise be able to afford or serve due to location.
- Increased security: Consolidated shipments are often more secure, as they are typically handled by experienced logistics providers who are experts in cargo handling and security. Plus, consolidated shipments may be easier to track and manage which reduces the risk of loss or theft.
Which industries can benefit from consolidated shipping?
As mentioned above, there are multiple benefits to implementing consolidated shipping into your logistics strategy. It’s a very versatile practice that can be applied to various situations and industries.
In e-commerce, consolidated shipping allows retailers to offer competitive shipping rates to customers and save money on shipping costs by pooling orders together. Retailers with multiple suppliers or manufacturers may consolidate shipments to their distribution centres or stores which also optimises inventory management.
Shipping internationally can also become increasingly expensive for small and medium online businesses as they start to scale or expand into new regions. Consolidated shipping can help lower costs by grouping together goods into a single container for more cost-effective overseas transportation. Various products headed to the same destination also makes it easier to manage documentation.
Automotive and spare parts
Automotive manufacturers and suppliers often put parts and components into consolidated shipments to optimise supply chain efficiency. This practice reduces lead times and transportation costs. Automotive repair shops and dealerships may also consolidate orders for spare parts from various suppliers to ensure availability, timely arrival and further cost savings.
When moving perishable goods like fruit, vegetables, grains, dairy, meat, etc, time is of the essence. Consolidated shipping will gather together produce from one region and ship it to its destination, allowing for more efficient timing and less waste.
Clothing manufacturers tend to consolidate shipments from various factories or suppliers to save on shipping costs and streamline distribution to retailers or wholesalers. Consolidation plays a huge role in fulfilment, where items of apparel will be consolidated by the customer and all sent to the same location. Overall this saves time and money for the seller and customer.
How to implement consolidated shipping into your logistics strategy
It is pretty straightforward to implement consolidated shipping practices, especially if you are already aware of your needs, requirements and constraints.
To begin, e-commerce stores should analyse your shipping volume, types of goods and shipping destinations, then determine whether your shipments are suitable for consolidation and where there are (if any) cost-saving opportunities. To make a consolidated shipping strategy successful, you will need to research logistics companies with experience in consolidated shipping. The company should have a network of carriers and the expertise.
Examples of logistics companies in the UK that offer consolidated shipping are:
- DHL Global Forwarding
- CEVA Logistics
- Kuehne + Nagel
- DSV Panalpina
- Hellmann Worldwide Logistics
- DB Schenke
It’s important to find a company that understands your company’s goals and growth strategy. Consider factors such as cost savings, improved efficiency and access to new markets. The next step is to review your inventory management processes to ensure that you can efficiently group shipments from multiple sources or suppliers.
Schedule regular shipments to maximise the use of consolidated shipping. Consistency will make it easier to group goods efficiently.
Once you have your consolidated shipping strategy in place, you can use tracking and visibility tools to monitor the status and location of your shipment. This can help in managing expectations and updating customers on any delays. Once the shipment has reached its destination, it may need to be deconsolidated to separate individual shipments before its send off to the customer. Partnering with 3PL services or fulfilment centres can help ensure this process is managed efficiently to avoid delays.
As your business evolves, be prepared to adapt your shipping strategy. Changes in shipping volume, product range or customer demand may require ongoing adjustments. You should also continuously monitor and analyse the cost savings and efficiency gains achieved through consolidated shipping. You can use this valuable information to refine your strategy and make data-driven decisions that help you scale your online business and shipping strategy effectively.
Emily Browne is a writer for ShippyPro who blends her passion for writing with an interest in all things e-commerce. Emily strives to make complex topics more digestible, proving that the world of logistics isn't as confusing as it sometimes feels! Her expertise in supply chain management, coupled with a knack for storytelling, helps readers navigate the complex world of e-commerce and shipping.